Multiple Choice
Which of the following methods typically maximizes consumer surplus when purchasing large items, such as furniture?
70
views
5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
Multiple Choice
If having a warranty on a car is important, a person should buy a car that is:
A
used, because used cars always have longer warranties
B
sold by a private owner, as private sales guarantee warranties
C
new, since new cars typically come with a manufacturer's warranty
D
older, since older cars are more likely to have warranties
Verified step by step guidance1
Understand the concept of a warranty: A warranty is a guarantee provided by the manufacturer or seller that promises to repair or replace a product if necessary within a certain period of time.
Recall typical warranty policies for cars: New cars usually come with a manufacturer's warranty that covers repairs for a specific duration or mileage, while used cars may have limited or no warranty depending on the seller and the car's condition.
Analyze the options given: Used cars do not always have longer warranties; private sales often do not guarantee warranties; older cars are less likely to have warranties because warranties expire over time.
Conclude that the best choice for someone who values having a warranty is to buy a new car, as new cars typically come with a manufacturer's warranty that provides coverage and peace of mind.
Summarize that the correct answer is 'new' because it aligns with the economic understanding of warranties and consumer protection in car purchases.
Related Videos
Related Practice
