Question

For each of the following purchases, say whether you would expect the degree of imperfect information to be relatively high or relatively low:

a. True
b. False

Answer 1

The degree of imperfect information is relatively low for purchasing apples at a roadside stand and buying dinner at a local restaurant due to the ability to inspect products or rely on reputation, but relatively high for purchasing a used laptop at a garage sale and ordering flowers online due to the lack of physical inspection.

Step-by-step explanation:

For each of the following purchases, it is essential to consider the degree of imperfect information to make informed decisions:

• a. Buying apples at a roadside stand: The degree of imperfect information is relatively low because you can inspect the apples directly.
• b. Buying dinner at the neighborhood restaurant around the corner: The degree of imperfect information is relatively low due to the local reputation of the restaurant.
• c. Buying a used laptop computer at a garage sale: The degree of imperfect information is relatively high as the internal condition of the laptop and its performance are not readily apparent.
• d. Ordering flowers over the internet for your friend in a different city: The degree of imperfect information is relatively high since you cannot see the flowers yourself and must rely on the seller's description and images.