Which of the following regarding a warranty is not true?
A)It is a form of consumer insurance.
B)Consumers may buy one even if the cost of the warranty is greater than the expected future claim paid by the manufacturer.
C)It decreases the consumer's expected utility from an item.
D)It signals to consumers that the goods are of high quality.

Question

Quizplus · Accepted Answer

A warranty is a form of consumer protection by the manufacturer or seller of a product, which guarantees the item's quality and promises to repair or replace the product without further charge if necessary. It is a form of insurance for consumers. Consumers may still buy a warranty even if the cost of the warranty is greater than the expected future claim paid by the manufacturer, as it provides peace of mind and protection against risk. A warranty signals to consumers that the goods are of high quality. However, it does not decrease the consumer's expected utility from an item, as it provides additional value and protection.

Which of the Following Regarding a Warranty Is Not True