A novelty store is worried that customers may be unfamiliar with the items they sell and thus reluctant to purchase


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A novelty store is worried that customers may be unfamiliar with the items they sell and thus reluctant to purchase


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A novelty store is worried that customers may be unfamiliar with the items they sell and thus reluctant to purchase. The owner is considering either using in-store demonstrations of the objects they are selling or providing some sort of money-back guarantee. Use diagrams representing the value function of the consumer to describe the tradeoffs in profit for each option. What impact should each policy have on the pricing of the items in the store?