Business, 11.03.2020 03:17 hannahgracew12

Your product fails about 2% of the time, on average. Some customers purchase the extended warranty you offer in which you will replace the product if it fails. Would you want to price the extended warranty at 2% of the product price?

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Answer from: johnthienann58

1) adverse selection will lead those who are more reckless to purchase the warranty

2) moral hazard will lead those who purchase to be more reckless

Explanation:

Adverse selection might be a factor if more people bought the goods that were at a more higher risk to abuse the product compared to the customer who is at low risk to misuse the product. Change in behavior called moral hazard could happen after the customer buys the insurance. This moral hazard could happen if the customers who buys the insurance tend to be careless in using the product. This could cause the fail rate to increase, and might make the company to replacing more units.

Answer from: Quest

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

Answer from: Quest

i think you have to let the moderators that you want your old account to be activated.

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Your product fails about 2% of the time, on average. Some customers purchase the extended warranty y...