Used car buyers believe a car is good quality when the seller signals the car's quality by offering a warranty because
A) a warranty on a lemon is costly to the seller.
B) warranties are only offered on lemons.
C) the signal cannot be false.
D) a false signal has no effect on the seller.

Question

Quizplus · Accepted Answer

A warranty on a lemon is costly to the seller, so offering a warranty signals confidence in the car's quality.

Used Car Buyers Believe a Car Is Good Quality When