Question

The statement “You get what you pay for” reflects the common perception that high prices indicate high product quality and low prices indicate low quality. Irrespective of market structure considerations, is this statement always correct? Explain your choice.

Answer 1

No, that statement is not always correct.

However, what is always correct is that if you pay a very low price, you will most likely get exactly what you pay for. Low price is often more correlated with low quality. Whereas the opposite is not always true. Paying a high price is less correlated with high quality.