Which of the Following Is a Characteristic of the Price-Quality

question 137

Multiple Choice

Which of the following is a characteristic of the price-quality relationship, in the absence of other cues?

• A) Many buyers interpret low prices as signals of high-quality products.
• B) Price offers no clue of a product's quality to prospective purchasers.
• C) Price is an important indicator of product quality to consumers.
• D) The relationship between price and quality holds true only in declining economies.

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Definitions:

Allocative Efficiency

Refers to a market situation where resources are apportioned in the most efficient manner, allowing for the optimal combination of goods and services production to meet consumer preferences.

Consumer Surplus

The variance between the aggregate sum consumers are prepared and capable of spending for a product or service and the aggregate sum they end up paying.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive following trade.

Marginal Benefit

The boost in pleasure or utility a person gets from purchasing one more unit of a product or service.