Lemon laws that allow consumers to return low-quality used cars are designed to help solve the problem of ________ in used car markets.
A. moral hazard
B. thick markets
C. experience ratings
D. adverse selection
Answer: D
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Resources that flow through the circular flow model include all of the following except:
a. land. b. labor. c. capital. d. final goods.
Tom is a castaway who washes up on a remote island. He can kill eight birds per hour or catch ten fish per day. The natives on the island can kill ten birds per day or catch twenty fish per day. According to comparative advantage, a. Tom should kill more birds and fish less, then trade birds for fish. b. Tom should kill fewer birds and fish more, then trade fish for birds. c. Both, Tom should
kill more birds and fish less. d. Both, Tom should kill fewer birds and fish more.
What causes the Tragedy of the Commons? (i) Social and private incentives differ. (ii) Common resources are not rival in consumption and are not excludable. (iii) Common resources are not excludable but are rival in consumption
a. (i) only b. (ii) only c. (i) and (ii) only d. (i) and (iii) only
In the short run, a firm incurs fixed costs
a. only if it incurs variable costs. b. only if it produces no output. c. only if it produces a positive quantity of output. d. whether it produces output or not.