n 2012, a California environmental group found that 14 plum and ginger candies i

Question

n 2012, a California environmental group found that 14 plum and ginger candies imported from Asia had contained 4 to 96 times the level of lead allowed under California law (Lee, Stephanie M., "Lead Found in Asian Candies," San Francisco Chronicle, August 14, 2012). Some observers predicted that U.S. consumers would face significant price increases if U.S. law were changed to require third-party testing by manufacturers and sellers. Suppose instead that candies could be reliably labeled "tested" or "untested," and untested candy sold at a discount. Would consumers buy cheaper, untested goods or would they fear a moral hazard problem? Discuss If candies can be reliably labeled tested or untested, then some consumers ( A. would not buy untested candy because it is indistinguishable from tested candy O B. would buy untested candy because it may or may not contain lead. O C. would buy untested candy because it sells at a discount. O D. would not buy untested candy because consumers would not know about lead content. OE. would not buy untested candy because producers have no incentive to reduce lead

Explanation / Answer

c. would buy untested ones because it contains discount.

Reason

Since the price of untested candies is lesser, some may buy it because it may give them more utility due to a cheaper price.

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