Suppose that there are only two types of used cars, peaches and lemons. Peaches are worth $10,000, and lemons are worth $4,000. If the market is such that only lemons are sold, then used cars are
A) experience goods and the used car market has effective signals.
B) experience goods and the used car market lacks effective signals.
C) not experience goods and the used car market has effective signals.
D) not experience goods and the used car market lacks effective signals.
B
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A firm can be the sole supplier of a good and is still not a monopolist if
A) the firm is not large. B) the good produced is not important to the economy. C) the firm is not making excessive profits. D) there are very close substitutes for the good.
Why should a firm not produce more than the rate of output at which marginal revenue equals marginal cost?
What will be an ideal response?
In a competitive market, the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller
a. True b. False Indicate whether the statement is true or false
Alexander lives in an apartment building and gets a $250 benefit from playing his stereo. Mary, who lives next door to Alexander and often loses sleep due to the loud music coming from Alexander's stereo, bears a $350 cost from the noise. Mary would like to offer Alexander some money to turn down the volume on his stereo. If Mary had to hire a lawyer to draw up the contract, what is the maximum
amount she could pay to the lawyer to ensure that both Alexander and Mary would benefit from the agreement? a. an amount less than $100 b. an amount between $100 and $250 c. an amount between $250 and $350 d. Any amount could result in both parties benefiting from the agreement.