Consumers know that some fraction x of all new cars produced and sold in the market are defective. The defective ones cannot be identified except by those who own them. Cars do not depreciate with use. Consumers are risk-neutral and value nondefective cars at $10,000 each. New cars sell for $8,000 and used ones for $2,000. (Note that since buyers are risk-neutral, the price of a new car reflects the expected value of purchasing a car that may or may not be defective.) What is the fraction x?
Ans: x=0.25
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
Edward lives in England, and he makes a donation of $100,000 dollars to Food for the Poor, a charitable organization in the United States. Edward's donation will be counted as a(n) ________ in England's current account
A) export B) factor payment C) transfer payment D) import
The social arrangement that gives John Grisham, the writer of best-selling novels, the ownership of his novels is
A) a market. B) property rights. C) absolute advantage. D) dynamic comparative advantage.
Barbara owns a small shop where dresses are made. At the end of a given month, she has 250 dresses. Her expenses for the month are $1,000 for rent, $6,000 for wages, $1,500 for fabric and thread, and $500 for electricity. Her total variable costs for the month are:
a. c and e. b. $4,000. c. $32 per dress. d. $7,500. e. $8,000.