Recent Research Shows That the Amount of a Guarantee Payout

question 30

Multiple Choice

Recent research shows that the amount of a guarantee payout has no effect on consumer cheating. Which of the following is one of the important managerial implications of this?

• A)Guarantees can be restricted to new customers because of the propensity for repeat customers to cheat.
• B)Guarantees can be kept low to prevent rewarding cheaters.
• C)Managers can reap the marketing rewards of higher guarantees without increased payouts due to consumer cheating.
• D)Managers cannot expect to recover the difference in guarantees for different types of consumers.
• E)Guarantee levels can be used to dissuade consumer cheating.

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Definitions:

Direct Costs

Expenses that can be directly attributed to the production of specific goods or services, such as labor and materials.

Annual Fixed Cost

Fixed costs that a business incurs over a year regardless of its activity level, such as rent, salaries, or insurance.

Technology Use

The application of scientific knowledge for practical purposes, especially in industry and daily life.

Time Efficiency

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