Sara wants to buy a new bike. She evaluates the bike on color, size, price, number of gears, and other features. The bike is an example of a credence good

a. Trueb. False

The given statement, "Sara wants to buy a new bike. She evaluates the bike on color, size, price, number of gears, and other features. The bike is an example of a credence good" is false.

Explanation:

A credence good is a kind of good that does not have quality after purchase, which makes it difficult for the consumer to measure its value. Expert facilities such as medical interventions, vehicle maintenance, and dietary supplements are excellent examples of credence products.

Sometimes because of information asymmetry, these goods demonstrate a direct relationship between cost and demand. Sellers are allowed to trick customers by charging high prices for a lower product, because of asymmetry.

For example, the more consumers knew about the inborn traits and qualities of a good, the nicer he or she would be able to identify its value. However, the information asymmetry suffers from the credibility of the goods.