Solved by verified expert :21)
It is rational for someone who wants to sell a lemon to offer the buyer a
money-back guarantee.
22)
Warranties reduce information asymmetry.
23)
Repair guarantees are a sign the seller thinks they have a lemon.
Recall the Application about federal quality
standards in the market for kiwifruit to answer the following question(s).
24)
Recall the Application. The U.S. kiwifruit information asymmetry was reduced by
advertising.
25)
People who buy used homes often insist on having a “home inspection”
before they finalize the purchase. If the house fails the inspection the buyer
has the right to refuse to buy the house unless the seller fixes whatever
problems are found. Does this help or hurt the seller?
26)
For what kinds of goods are buyers most likely to seek additional information
about quality?
27)
Some states have laws that require that used car dealers give buyers a 30-day
period during which they can return cars that are discovered to be lemons (low-quality).
Whom do laws like this help? Whom do they hurt?
28)
Who is more likely to offer a money-back guarantee: a seller of a lemon or a
seller of a plum? Why?
Recall the Application about federal quality
standards in the market for kiwifruit to answer the following question(s).
29)
Recall the Application. Why were there so many “lemon” kiwifruit in
the U.S. market?
9.3 Insurance and Moral Hazard
1)
Which of the following is NOT an example of moral hazard?
A)
People take poor care of their health because they have health insurance.
B)
People drive recklessly because they have medical insurance.
C)
People don’t lock their doors because they have theft insurance.
D)
All of the above are examples of moral hazard.
