Joe is in the market for a mattress.He is deciding between two different mattresses: one that is fairly expensive but offers a free 20-year manufacturer's warranty and another that is lower-priced but only offers a on-year manufacturer's warranty.Joe's decision to purchase the more expensive mattress would indicate that:

Question

Quizplus · Accepted Answer

Joe's decision to purchase the more expensive mattress with a 20-year manufacturer's warranty indicates that he interpreted the warranty as a quality indicator, meaning that he believes the higher-priced mattress is likely to have better quality and durability. This does not necessarily indicate a high level of income or lack of price sensitivity, and it is not a sign that Joe is not a utility maximizer as individuals may have different preferences and values when it comes to maximizing their utility.

Joe Is in the Market for a Mattress