Asymmetric information arises when:
a. both the parties to an exchange have perfect information about the good.
b. none of the parties to exchange have any information about the good.
c. one party to an exchange knows more than the other party.
d. a good is provided by the government.
e. the market is perfectly competitive.
c
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Laws that make it illegal for firms to conspire to raise prices or reduce production are known as
A. antimonopoly laws B. all of these answers C. anti-collusion laws D. pro-competition laws E. antitrust laws
Exhibit 17-4 Short-run and long-run Phillips curves
Suppose the economy in Exhibit 17-4 is at point E1, and the Fed increases the money supply. If people have adaptive expectations, then the economy will move:
A. to point A in the short run and point B in the long run. B. directly to point B. C. to point C in the short run and point D in the long run. D. directly to point D.
What is the lowest price the firm would accept in the long run?
When sellers have more information about the quality of a good than buyers do, a relatively large share of the goods in the market will be low-quality goods. This is the ________ problem.
A. free-rider B. law of diminishing returns C. adverse selection D. moral hazard