If a typical consumer is willing to pay $3,000 for a plum and $1,000 for a lemon, and there is a 50% chance of getting a lemon, the typical consumer is willing to pay $2,000 for a used car.
Answer the following statement true (T) or false (F)
True
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If the domestic producers of a good benefit from free trade, it suggests that the country:
A. is a net importer of that good. B. does not have an absolute advantage in that good. C. does not have a comparative advantage in that good. D. is a net exporter of that good.
Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured. In other words, the automobile insurance market is subject to
A) moral hazard. B) adverse selection. C) asymmetric information. D) market signaling.
For a monopolist with a downward-sloping demand curve, the quantity effect dominates the price effect at:
A. low levels of production. B.high levels of production. C. levels at which elasticity is unit-elastic. D. all levels of production.
What happens to the marginal cost curve when the marginal physical product of labor is rising?
A) It becomes upward sloping. B) It becomes vertical. C) It becomes downward sloping. D) It becomes horizontal.