Q 104

Suppose that two types of indistinguishable coffee beans are imported to the U.S.: those grown in the mountains of South America and those grown in greenhouses in Canada.Mountain grown coffee produces a better tasting coffee,but buyers cannot distinguish the beans by sight or smell.Only the importers know the source of the beans.Buyers value mountain grown beans at $10 a pound and greenhouse grown beans at $3 a pound.Assume that 70% of imported beans are mountain grown,and 30% are greenhouse grown. Mountain grown beans will ________ unless importers can _______ A) disappear from the market;trick buyers. B) dominate the market;increase imports from Canada. C) dominate the market;reduce the price of Canadian beans. D) disappear from the market;credibly signal their source.

Multiple Choice