Which of the Following Are Potential Problems Faced by a Firm

question 18

Multiple Choice

Which of the following are potential problems faced by a firm that wants to provide warranties for its lawnmowers? (Select all that apply.)

• A)A moral hazard problem might arise,in that homeowners may be less careful with the mower,since they can always return it if it breaks.
• B)The warranty may select for homeowners that don't have a lot of mowing to do,or have smooth lawns,because they won't have to pay as much for a warranty.
• C)The warranty will increase demand by assuring customers of the product's quality.
• D)The warranty will reduce demand because only makers of low-quality goods would need to reassure consumers in this way.

---

Definitions:

Division of Labor

The allocation of different tasks or jobs to different people or groups, usually based on specialization.

Skills

Developed abilities or expertise in specific activities, often acquired through practice and learning, that enable proficient performance.

Jobs

Jobs consist of assigned tasks or roles performed by individuals within an organization or professional context in exchange for compensation.

Work Revolution

A period or movement where significant changes occur in the nature of work due to technological advances, economic shifts, or cultural transformations.