Because the Presence of a Warranty for a Good Is

question 79

Multiple Choice

Because the presence of a warranty for a good is a signal that the good is of high quality,

• A) consumers are willing and able to pay more for a good that carries a warranty.
• B) consumers are willing to buy goods if and only if the goods come with warranties.
• C) producers do not need to charge extra for warranties.
• D) producers can use warranties to sort out high-risk customers.
• E) producers must make warranties available on all goods.

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Definitions:

Tendered Bid

A formal offer submitted in response to an invitation to bid for a project, often including price and terms of service.

Caveat Emptor

A Latin phrase meaning "let the buyer beware," implying that the buyer assumes the risk about the quality and condition of the product being sold.

Standard Form Contract

A contract with fixed terms prepared by a business.

Consideration

Something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.