Consider a used car market in which half the cars are good and half are bad (lemons). Suppose the average price of a good car is $9,000 and the average price of a lemon is $3,000
If rational buyers are willing to pay $6,000 for a used car, then sellers will agree to sell mostly lemons at this price. What is the term used to describe this situation?
A) adverse selection B) an efficient market
C) moral hazard D) economic irrationality
A
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If basic literacy promotes a consistency of individual and social goals
a. social returns exceed private returns b. private returns exceed social returns c. the individual's income will rise d. people should pay the full cost of their education e. costs of education will be low
The opportunity cost of holding excess reserves will be lower at an 8 percent federal funds rate in comparison to a 10 percent federal funds rate
a. True b. False Indicate whether the statement is true or false
According to the Keynesian transmission mechanism, an increase in the money supply causes a(n) __________ in the interest rate and a(n) __________ in investment, which in turn causes a(n) __________ in total expenditures and aggregate demand
A) increase; decrease; decrease B) increase; increase; decrease C) decrease; increase; increase D) decrease; decrease; increase
Examples of command economies are:
A. the United States and Japan.
B. Sweden and Norway.
C. Mexico and Brazil.
D. Cuba and North Korea.