Use the Following to Answer Questions

question 60

Multiple Choice

Use the following to answer questions :
Scenario: Used-Car Market
In the used-car market,cars of poor quality are called lemons,whereas cars of good quality are called plums.Suppose that the probability of obtaining a lemon is 60% and the probability of obtaining a plum is 40%.Also,assume that a plum is worth $15 000 and a lemon is worth $3 000.
-(Scenario: Used-Car Market) Use Scenario: Used-Car Market.If buyers cannot distinguish between lemons and plums,eventually this used-car market will:

• A) be made up mostly of lemons.
• B) have buyers who will have a 50% chance of choosing a plum.
• C) be made up mostly of plums.
• D) be made up of 50% plums and 50% lemons.

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Definitions:

Life Cycle Curve

A graphical representation of the stages through which a product goes from its introduction to the market through its growth, maturity, and eventual decline.

Early Adopters

A category of consumers who are among the first to purchase and use a new product or technology, often before the wider market adoption.

Product Life Cycle

The advancement of a product through phases such as its launch, growth, peak, and eventual decline in the marketplace.