Question

Which one is Incorrect

A. renewing their subscription
B. picking up grocery items on a trip to a big box store.
C. subscribing to a rival online grocer.
D. visiting the convenient mart down the street.
E. ordering dinner using restaurant

Answer 1

The degree of imperfect information is relatively low when buying apples at a stand or dinner at a restaurant because the quality and price are clear. However, it is relatively high when buying a used laptop at a garage sale or ordering flowers online, as it is more difficult to assess the product's condition and ensure the representation's accuracy.

Step-by-step explanation:

The question seems to focus on the concept of imperfect information in the context of consumer behavior, particularly as it relates to making purchases. The degree of imperfect information refers to how much buyers and sellers do not know about a product's characteristics, price, or quality. A higher degree of imperfect information suggests greater uncertainty and risk involved in the transaction for the consumer.

When assessing the degree of imperfect information:

• Buying apples at a roadside stand is likely to have a relatively low degree of imperfect information, as the buyer can easily assess the quality and price of the apples at the point of purchase.
• Buying dinner at the neighborhood restaurant also has a relatively low degree of imperfect information, given that the reputation of the restaurant and immediate experience of the meal can inform the buyer.
• Buying a used laptop computer at a garage sale typically involves a relatively high degree of imperfect information due to the difficulty in fully assessing the condition and functionality of the used electronics without thorough testing, which is not always possible at the point of sale.
• Ordering flowers over the internet for a friend in a different city would likely involve a relatively high degree of imperfect information as the buyer cannot see the actual flowers being sent and must rely on the seller for an accurate representation.

The example regarding Netflix's customer retention illustrates how the presence of multiple, although not identical, substitute services can affect a company's estimates of customer behavior and suggests that physical proximity and tangible products can still outweigh the convenience of online services for some consumers.