Joe's Computers Builds and Sells Computers for the Local Retail

question 238

Multiple Choice

Joe's Computers builds and sells computers for the local retail market.Since Joe's business does not have the name recognition of some of the bigger computer retailers,Joe advertises a "One-Year Money Back Guarantee" to indicate to buyers that his product is of high quality.This guarantee is an example of

• A) screening.
• B) signaling.
• C) the seller's curse.
• D) the principal-agent problem.

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Definitions:

Mutual Mistake

A contract law term where all parties involved have a mistaken understanding about a crucial aspect of the agreement.

Basic Assumption

A fundamental belief or principle that is accepted as true without need for proof, underlying the basis of an argument or theory.

Material Effect

An impact significant enough to influence a decision, outcome, or valuation, often used in legal and financial contexts.

Rescind

means to revoke, cancel, or repeal a contract, decision, or agreement.