Consider a used car market in which half the cars are good and half are bad (lemons). A rational buyer in this market should
A) offer to pay a price equal to the most she would pay for a good car.
B) offer to pay a price equal to the most she would pay for a lemon.
C) offer to pay a price somewhere between the price she would pay for a good car and the price she would pay for a lemon.
D) save up and buy a new car.
Answer: C
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When one person consumes a nonexcludable good,
a. others cannot be prevented from also consuming it. b. it can be provided to others for no additional cost. c. the amount available for others to consume is reduced. d. any other users will receive zero economic rent from it.
What is the tragedy of the commons? Give two examples, including one from your state
What will be an ideal response?
Figure 7-11
Figure 7-11 shows an average cost curve with points on it that correspond to three quantity levels. Which of the following statements must be wrong?
A. The firm’s technology may show increasing marginal returns as production increases from A to B. B. The firm may have positive fixed costs. C. As production expands from A to B to C, the firm may become increasingly difficult to manage efficiently. D. The firm’s average fixed cost may rise as production increases from B to C.
The consumption function shows the relationship between
A) interest rates and planned real consumption. B) employment and planned real consumption. C) the price level and planned real consumption. D) real disposable income and planned real consumption.