Asymmetric information exists in the market for used cars because:
A. sellers have better information concerning the quality of used cars than buyers.
B. buyers have better information concerning the quality of used cars than sellers.
C. buyers and sellers have equal information concerning the quality of used cars.
D. it is impossible for buyers or sellers to determine the quality of used cars.
Answer: A
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If government spending and the price level increase, then
A) the interest rate decreases, consumption increases, and investment spending increases. B) the interest rate decreases, consumption declines, and investment spending declines. C) the interest rate increases, consumption declines, and investment spending declines. D) the interest rate increases, consumption increases, and investment spending increases.
Cartels are difficult to maintain because
a. antitrust laws are difficult to enforce. b. cartel agreements are conducive to monopoly outcomes. c. there is always tension between cooperation and self-interest in a cartel. d. firms pay little attention to the decision made by other firms.
When a tax is levied on buyers of tea,
a. buyers of tea and sellers of tea both are made worse off. b. buyers of tea are made worse off, and the well-being of sellers is unaffected. c. buyers of tea are made worse off, and sellers of tea are made better off. d. the well-being of both buyers of tea and sellers of tea is unaffected.
Which of the following is most consistent with the benefits principle?
A. Charging taxes to the people who use the funded services B. Taxes that account for a person’s ability to pay C. Excise taxes on imported aluminum D. Sales taxes on cigarettes