Business
Answer each question in 125 words using at least 1 scholarly source. Each question is separate from the other.
Question1: Consumers often assume that they are at an informational disadvantage when dealing with producers of goods and services. They recognize that because of asymmetric information, they are at a disadvantage in fairly evaluating some product offerings. As a result, consumption is sometimes depressed.
As a manager, what steps would you take to reassure potential customers that you are not taking advantage of them? How can you accomplish this without revealing too much proprietary information or without damaging profitability? As a competitor to a firm taking pains to appear to be open and honest, what strategies would you pursue.
Offer real-life examples.
Question2: Sometimes, firms can grow profits by charging below-cost prices for a product while selling a related product above cost. The classic case is when razor blade manufacturers practically give away the razor, with the understanding that the sale of blades fitted to that particular razor will generate substantial profits.
Give examples of other industries in which such strategies are employed. Are there twists to the practice that you can suggest?