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FastRide has begun selling Bikes. Though they produce a top-notch product, FastRide knows that sometimes things go wrong in production or use that causes their
FastRide has begun selling Bikes. Though they produce a top-notch product, FastRide knows that sometimes things go wrong in production or use that causes their eBikes to not work properly. Right now customers bear the full risk of eBike malfunctions and the associated costs of repair. FastRide is considering including a full warranty that will cover all repairs (for any reason) with their bikes. Assume that FastRide is risk neutral, but its customers are risk averse. If Fast Ride begins offering such a warranty and the rate of malfunctions remains the same, we expect the price and quantity of eBikes to
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