It Is Often Difficult for a Customer to Know the Quality

question 88

Multiple Choice

It is often difficult for a customer to know the quality of a 3-D television. If a television manufacturer advertises its 3-D televisions then:

• A)this is a costless action that fails to signal the 3-D television is a good product
• B)this is a costless action that succeeds in signalling that the 3-D television is a good product
• C)this is a costly action that succeeds in signalling that the 3-D television is a good product
• D)this is a costly action that fails to signal the 3-D television is a good product

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Definitions:

Budget Line

A budget line represents the combination of goods and services that a consumer can purchase given their income and the prices of those goods and services.

Consumer's Equilibrium

A state where an individual allocates their income in a way that maximizes their satisfaction or utility, given their budget.

Demand for Product X

The total quantity of Product X that consumers are willing and able to purchase at various price levels, within a given time frame.

Indifference Map

A graphical representation showing different bundles of goods between which a consumer is indifferent, illustrating preferences and trade-offs.