Figure 14.1 represents the market for used bikes. Suppose buyers are willing to pay $200 for a plum (high-quality) used bike and $50 for a lemon (low-quality) used bike. If buyers believe that 50% of used bikes are lemons (low quality), how many plums (high quality) will be supplied by sellers?
A. 8
B. 12
C. 16
D. 22
Answer: A
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For a particular production function, over the range of output where marginal product rises as units of the variable input are added to the fixed input, marginal cost will be:
A) increasing. B) constant. C) decreasing. D) cannot be determined without additional information.
Unemployment compensation is an example of:
A) non-discretionary expenditures. B) discretionary expenditures. C) taxes. D) none of the above.
Which of the following would not be considered price discrimination?
a. charging higher rates on long distance calls during normal business hours b. giving lower air fares to those who buy tickets a month before departure c. charging lower prices for senior citizens at museums d. getting separate prices for residential and commercial users of natural gas e. charging more for BMWs than for Chevrolets
Voluntary trade promotes economic progress because
A) it discourages trade based on the comparative advantage of suppliers. B) This is a trick question; voluntary exchange does not promote economic progress. C) it moves goods, services and resources from people who value them less to individuals who value them more. D) it discourages businesses from seeking lower per-unit costs through adoption of mass production methods.