The format of the assessment process on modules may change from semester to semester. This may not be the current format for your module. Always check with the relevant module leader what the precise, current format is before you begin to prepare for the assessment on any given module. Answer TWO questions.
All questions carry equal marks.
Explain the circumstances under which competition by firms through quality can result in prices and quantities which are identical to those observed in a perfectly competitive market without product differentiation. In circumstances in which there are information asymmetries between sellers and buyers concerning the quality of products of different firms, explain the way in which product warranties can be used by buyers to obtain an accurate ranking of products according to their quality.