When Consumers Cannot Judge Quality Because They Lack the Information

question 130

Multiple Choice

When consumers cannot judge quality because they lack the information or skill,price becomes .

• A)insignificant
• B)an important quality signal
• C)negotiable
• D)the only driver of the purchase
• E)less important

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Definitions:

Economist

A professional or expert in economics, studying the production, distribution, and consumption of goods and services.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.

Price-taker Market

A market situation where buyers and sellers accept the prevailing market price as they individually have no influence over it.

Short-run Market Supply

The total quantity of a good that producers are willing and able to sell at a given price over a short period.