A Home Has Been on the Market for an Extended

question 137

Multiple Choice

A home has been on the market for an extended amount of time without much interest from buyers. The sellers decide to purchase and include a home warranty insuring against major defects with the home. The warranty is an example of a(n)

• A)signal.
• B)screen.
• C)moral hazard.
• D)adverse selection.

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Definitions:

Advertising

The action of calling attention to products, services, or ideas through paid announcements by an identified sponsor.

Oligopoly

An industrial configuration in which a small group of companies exercises significant authority over market pricing and competition.

Economies of Scale

The reduction in per-unit cost as the scale of production increases, leading to greater efficiency and lower costs for large-scale producers.

Foreign Competition

The presence and impact of competitors from other countries in a domestic market, often influencing prices, market shares, and industry standards.