MARK 4500 Lecture 13: Lecture 13
8 Mar 2018
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Consumers do not have adequate knowledge ignorance. Advertising can mislead or misinform and decisions are often based on past experience rather than future knowledge. Ex: homeowners buying homes and not predicting the housing market crash. Ex: consumers purchasing something from tv without doing research and realizing its not what they wanted. Markets react slowly to changing conditions; p(cid:396)odu(cid:272)tio(cid:374) is(cid:374)"t usually instantaneous. Ex: we have a shortage of qualified nurses in the us partially due to the long schooling requirements (obamacare made the problem much worse because more people started going to the doctor) Ex: if consumers lose interest in a certain video game, it will take time for the price to drop. Transaction costs are those involved in making and carrying out a market transaction, agreement or contract between two or more parties: obtaining/evaluating information, negotiating a formal/informal contract, monitoring, evaluating the contract. We do(cid:374)"t a(cid:272)tuall(cid:455) k(cid:374)ow the (cid:272)o(cid:396)(cid:396)elatio(cid:374) (cid:271)etwee(cid:374) p(cid:396)i(cid:272)e a(cid:374)d (cid:395)ualit(cid:455)
