Figure 14.1 represents the market for used bikes. Suppose buyers are willing to pay $200 for a plum (high-quality) used bike and $50 for a lemon (low-quality) used bike. If buyers have pessimistic expectations about the used bikes in the market, what number of used bikes sold will actually be lemons (low quality)?
A. 8
B. 12
C. 16
D. 22
Answer: B
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The labor theory of value
A) is what economists believe determines prices today. B) says that wages must always be greater than prices. C) says that the price of a good is determined by the amount of labor required to produce it. D) All of the above.
When short-term interest rates are expected to fall sharply in the future, the yield curve will
A) slope up. B) be flat. C) be inverted. D) be an inverted U shape.
The number of futures contracts outstanding is called
A) turnover. B) volume. C) float. D) open interest.
Simon is given a free ticket to see Coldplay Saturday night. He already has a ticket to see Sting in concert that night. The Sting ticket cost Simon $50 though he would have paid as much as $80 to go to the show
Simon knows that he can easily sell the Sting ticket on Craigslist for $60. What is his opportunity cost of seeing Coldplay?