4. Your product fails about 2% of the time, on average. Some customers purchase
ID: 1097280 • Letter: 4
Question
4. Your product fails about 2% 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% of the product price? Discuss both moral hazard and adverse selection issues. 5. Lightweight personal locator beacons are now available to hikers that make it easier for the Forest Service's rescue teams to locate those lost or in trouble in the wilderness. How will this affect the costs that the Forest Service incurs? (Ch 20 Individual Problem 3) 4. Your product fails about 2% 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% of the product price? Discuss both moral hazard and adverse selection issues. 5. Lightweight personal locator beacons are now available to hikers that make it easier for the Forest Service's rescue teams to locate those lost or in trouble in the wilderness. How will this affect the costs that the Forest Service incurs? (Ch 20 Individual Problem 3)Explanation / Answer
5) Certainly it will cut cost in :
1. Manpower: As with the locator animals can be easily be located, so the number of man power required to disperse through forest would not be needed and hence it would save a loads of money.
2. Diesel: The diesel/petrol cost for many required automobile can also be saved here.
(The costs incurred by Forest service involve costs in locating lost hikers. If it becomes easier to find them with new beacons then the efforts and costs are lowered. Thus the costs incurred by hikers to buy and use new beacons are presumably higher. But it leads to lower costs for Forest Services.)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.