If quality-detection costs are very low,
A) low quality products will tend to be withdrawn from the market, and the average quality will rise.
B) low quality products will tend to be withdrawn from the market, but the average quality will fall.
C) high quality products will tend to be withdrawn from the market, and the average quality will rise.
D) high quality products will tend to be withdrawn from the market, and the average quality will fall.

Question

Quizplus · Accepted Answer

When quality-detection costs are very low, it becomes easier and cheaper to identify low quality products. As a result, they are more likely to be withdrawn from the market, which will lead to a rise in the average quality.

If Quality-Detection Costs Are Very Low