Question
20-1 Extended Warranties Your product fails about 2 percent of the time, on average. Some customers purchase the extended warranty you offer in which you
20-1 Extended Warranties
Your product fails about 2 percent of the time, on average. Some customers purchase the extended warranty you offer in which you will replace the product if it fails. Would you want to price the extended warranty at 2 percent of the product price? Discuss both moral hazard and adverse selection issues.
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Modern Principles of Economics
Authors: Tyler Cowen, Alex Tabarrok
3rd edition
1429278390, 978-1429278416, 1429278412, 978-1429278393
