Chapter 10 Quiz

Why would a report card that measures inputs possibly lead to multitasking?

sellers may invest only in reported inputs but scale back on unreported inputs

Products for which consumers cannot easily evaluate quality even after purchasing and using the product are called:

credence goods

Unraveling is an economic theory that describes which of the following?

even low quality sellers will disclose their product quality

Products for which consumers cannot easily compare product characteristics and value information from others are called:

experience goods

Location can provide which of the following?

horizontal differentiation

Which of the following is measured by a report card that assesses the components of a product?

inputs

Which of the following terms describes when firms with high scores tend to have more than their share of luck in rankings?

mean reversion

Which of the following terms describes when efforts to promote improvements on one dimension of performance are confounded by changes in other dimensions of performance?

multitasking

Which of the following is a statistical process in which raw outcome measures are adjusted for factors that are beyond the control of the seller?

risk adjustment

Which of the following would make an outcome report card difficult to produce?

small sample of outcome measures

Why do consumers often rely on friend's advice when shopping for experience goods?

they know their friend's tastes

When is a signal informative?

when it is more profitable for the high quality firm to offer it