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The muffler on your car suddenly needs repair, and there are only two automobile repair shops in town. You drive to the first shop, and the mechanic...

The muffler on your car suddenly needs repair, and there are only two automobile repair shops in town. You drive to the first shop, and the mechanic tells you to leave the car and he will repair it. Payment will be due when you pick it up. A mechanic at the second shop looks at your car and guarantees that she will charge you only $99.95 to repair the muffler, as advertised. Which repair shop is likely to provide costly needless repairs to your car, and why? Which one may underprovide quality? In your answers, discuss the concepts of prospective and retrospective payment for services.

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Economics - 8066644.doc

The muffler on your car suddenly needs repair, and there are only two automobile repair
shops in town. You drive to the first shop, and the mechanic tells you to leave the car and
he will repair...

Sign up to view the full answer

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