Figure 14.3 represents the market for used refrigerators. Suppose buyers are willing to pay $300 for a plum (high-quality) used refrigerator and $100 for a lemon (low-quality) used refrigerator. If buyers believe that 50% of used refrigerators in the market are lemons (low quality), what fraction of used refrigerators sold will actually be plums (high quality)?
A. 50/250
B. 50/300
C. 250/300
D. None of the refrigerators sold will be plums.
Answer: B
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Country A specializes in the production of automobiles and 45% of its population works in the automobile manufacturing industry. A sharp increase in world prices for automobiles led to a boom in the automobile manufacturing industry in Country A
However, the automobile manufacturers overestimated the demand for automobiles. This led to overproduction which resulted in a large stock of unsold cars. Which of the following is likely to happen in the near future? A) Investment in Country A will increase. B) The supply of credit in Country A will increase. C) Household consumption in Country A will increase. D) The unemployment rate in Country A will increase.
Firm A is a monopsonist that faces a labor supply elasticity of 2.4 whereas Firm B is a monopsonist that faces a labor supply elasticity of 1.4. Which of these monopsonists pays a higher wage?
A) Firm A B) Firm B C) They both pay the same. D) It is impossible to tell which pays a higher wage.
Which of the following firms best fits the definition of a monopoly?
a. General Motors b. Exxon Mobile c. Local electric utility d. AT&T
A perfectly competitive firm hires more resources than a monopolist
a. True b. False Indicate whether the statement is true or false