Chapter Twenty-Seven 1. The Latin phrase caveat emptor, or “let the buyer beware”…the phrase embodies the idea that the buyer alone is ultimately responsible for assessing a producer and the quality of the items it sells before agreeing to purchase the firm’s product. Whenever I am in the market for looking to buy a particular item I tend to do a lot of research of different stores and I tend to read some of the reviews. If most of the reviews are negative I will not buy that product. I want to make sure that I am as much aware of the pros and cons of what I am buying before I buy it because I hate returning items to a store. 2. The second common rationale is asymmetric information. In the context of many producer- consumer interactions, this term refers to situations in which a producer has information about a product that the consumer lacks. For instance, 3. Asymmetric information can create situations in which most of the available products are of low quality. I can remember that last year when I was looking online for cars I wanted a specific car for a specific price. Well I have found about six and compared the pros and cons and found the right one. I got it at a low price because that type of car was no longer in demand. 4. Lemon Problem-the potential for asymmetric information to bring about a general decline in product quality in an industry. Besides a broken car being considered a lemon. In my household we had upgraded our computer and TVs to the new ones because nobody is no longer selling the box screen computers and TVs. If something were to go wrong we would have to replace them anyways. 5. A firm engages in product versioning when it sells an item in slightly altered forms to different groups of consumers. A typical method of versioning is to remove certain features from an item and offer what remains as a somewhat stripped down version of the product at a different price. For instance, when my husband needs parts for my truck or any car he tends to work on he would go to this place called pick a part because you can get a lot of parts there for cheap compared to how much places like AutoZone is charging. He needed to get some spark plugs and pick a part did not have them but AutoZone did, they were charging thirty dollars for each one and I needed like four. 6. Antitrust authorities have been less tolerant of another form of product packaging, known as bundling, which involves the joint sale of two or more products as a set. I love it when things come in a bundle because it is a lot cheaper that way. For example, when I was looking for a new computer on Walmart.com had this tax bundle thing going on where. For one bundle I can choose a computer, a used thingy, lap top bag and printer for 385 and the other bundle was everything that the first bundle has put no printer and that cost 350. Well I ended up just going into the store to buy a computer. 7. Firms offering truly high quality products for sale can address the lemons problem in a variety of ways. They can offer products guarantees and warranties. Warranties are always good but depending on the price sometimes I would buy them and other times I will not.
Chapter Twenty eight 1. Publishers are finding that e-book sales are booming as consumers substitute away from purchase of physical books to buying books in electronic formats viewable on digital devices I personally hate the whole e books thing. I do not have hours to spend reading twenty pages because of the eye problems that I have and plus I tend to get a head ache. I wish that the schools would give the student the option if they want e books or not. 2. When a home industry’s firms can obtain foreign labor services that are a close substitute for home labor services, the demand for labor services provided by home workers will decrease I have noticed that a lot of companies in the united states send to go to other counties like china or tiwane because the labor out there is much more cheaper than the labor out here in the united states. I think that whatever the companies would have to pay in the United States they pay half of that in those countries. 3. At higher wage rates, more workers will want to enter that particular industry. Since I have been unemployed for over a year at this point I will take anything. If a particular industry pays a certain amount of money I would just apply for it.