The Idea That When a Seller Has Private Information About

question 47

Multiple Choice

The idea that when a seller has private information about the value of good,buyers will discount the price they are willing to pay due to adverse selection is known as the:

• A)pecking order hypothesis.
• B)signaling theory of debt.
• C)lemons principle.
• D)credibility principle.

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Definitions:

Customer-Led Pricing

A pricing strategy that asks customers how much they are willing to pay and then offers the product at that price.

Pricing Strategy

The approach businesses use to set the prices for their products or services, influencing sales and revenue.

Introductory Offer

A pricing strategy to encourage people to try a new product by offering it for free or at a heavily discounted price.

Heavily Discounted Price

A significantly reduced price off the original or market cost of goods or services, often used as a promotional strategy.