Why is the study of asymmetric information associated with the market for "lemons"?
A) Sellers of citrus fruit—lemons, oranges, grapefruit—know the difference between bad fruit and good fruit; buyers do not have this information.
B) Because there is little advertising in the market for lemons, buyers have difficulty determining the quality of lemons before they are purchased.
C) Potential buyers of used cars have difficulty separating good used cars from bad used cars; bad used cars are often referred to as "lemons."
D) Most sellers of used cars have less information about their cars than the dealers who buy them; used cars are often referred to as "lemons."
Answer: C
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Juan and Sophia have decided to stop studying economics and get a bite to eat. Juan wants to go for a pizza and Sophia wants a hamburger. They decide to go for pizza. What can we conclude from this?
A) Juan always gets more utility from pizza than Sophia does. B) Sophia gets less utility from pizza than she could from a hamburger. C) Sophia will get negative utility from the pizza. D) Utility analysis does not work here since Sophia did not eat a hamburger.
Milton Friedman and Edmund Phelps contributed which insight(s) to Phillips curve analysis?
A) that inflation is directly related to expectations of future inflation B) that inflation is negatively related to the unemployment gap C) that in the long run unemployment will be at the natural rate D) all of the above E) none of the above
The unemployment rate decreases when we go from
A. W to X.
B. X to W.
C. X to Y.
D. Y to X.
The above table depicts the output of a firm that manufactures computers. The computers sell for $1,000 each. What is the marginal physical product (MPP) of the eleventh worker per week?
A. $6,000 B. $7,000 C. 90 units D. 80 units