Answer to Question #319840 in Macroeconomics for emmy

Question

a)              Assume a reputable firm which is tempted to temporarily deceive its customers by dropping the quality of its product in the present period but retain a high price, so that it derives a temporary high profit equal to B. Further assume that there is a P probability that after its customers realise that they have been cheated they never trust the firm again, so that the profits of the firm fall by X in perpetuity. Identify the relationship between B and X which will lead the firm to never deceive its customers.

Answer 1

Consumer shopping for conduct refers back to the have a look at of clients and the way they behave even as determining to shop for a product that satisfies their needs. It is a have a look at of the movements of the clients that pressure them to shop.But if the customer looses trust in your business they will not do business with you and this will make your business to fall.