Suppose buyers in the used car market are willing to pay $3,500 for a plum (high-quality) used car and $1,500 for a lemon (low-quality) used car. If buyers believe that 30% of the used cars on the market are lemons (low quality), what would they be willing to pay for a used car?
A. $2,000
B. $2,500
C. $2,900
D. $3,500
Answer: C
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What will be an ideal response?
According to the World Bank’s system, countries in the fast growth club have a GDP growth of
a. 5% or more per year. b. 2% or less per year. c. 2% or more per year. d. 5% or less per year.
Each of the following is a provision of the 1996 welfare reform law except that
A. the federal guarantee of cash assistance for poor children is ended. B. the head of every welfare family would have to work within 2 years or the family would lose benefits. C. after receiving welfare for two months adults must find jobs or perform community service. D. women who have more children while on welfare will have their benefits reduced.
To eliminate an AD shortfall of $100 billion when the economy has an MPC of 0.80, the government should increase transfer payments by
A. $80 billion. B. $100 billion. C. $20 billion. D. $25 billion.