Two Types of Existing Houses Are for Sale: Ones with a Cracked

question 57

Multiple Choice

Two types of existing houses are for sale: ones with a cracked foundation and ones without.In all other respects,they are identical.Houses without cracked foundations are worth $200,000 while those with cracked foundations are worth $200,000 minus the $20,000 to fix the crack or $180,000.The frequency of solid foundations is 80%.Sellers know which type of house they have but buyers cannot detect a crack.No seller "must" sell his house in order to move and thus no one accepts anything less than its value.
How can owners of a solid foundation home signal high quality credibly?

• A)Keep it on the market indefinitely at $200,000 because eventually buyers will catch on.
• B)Advertise in the national TV stating the quality of the house.
• C)Lower their price to $196,000.
• D)Offer a warranty to fix any slab problems that develop in the next 12 months.

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Definitions:

Organizational Position

The rank or status of an individual within a company's hierarchy, defining their roles, responsibilities, and authority.

Control

The process of directing and regulating the behavior or course of events in a business to achieve management's objectives.

Motivating Commitment

The process of encouraging individuals to remain dedicated and persist in their engagement with tasks or goals.

Leading

The act of guiding or influencing others to achieve organizational or group goals through motivation and leadership skills.