One consequence of the asymmetric-information problem in the used car market, if left unresolved, is the higher probability of
What will be an ideal response?
a declining quality of used cars for sale in the market.
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Given that the market wage rate is $50 and both the labor and the goods market are perfectly competitive, a profit-maximizing firm should hire an additional worker if:
A) the marginal product of the worker is 50 units. B) the value of marginal product of the worker is at least $50. C) the marginal product of the worker is less than 50 units. D) the value of marginal product of the worker is less than $50.
As a result of a decrease in the price of gasoline, consumers can afford to buy more gasoline for more driving trips. This is an illustration of
A. consumer sovereignty.
B. the substitution effect.
C. diminishing marginal utility.
D. the income effect.
Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, then point __________ illustrates productive inefficiency.
 ANSWER 8.png)
Suppose Argyle Sachs has to choose between building a smaller sweater factory and a larger sweater factory. In the following graph, the relationship between costs and output for the smaller factory is represented by the curve ATC1, and the relationship
between costs and output for the larger factory is represented by the curve ATC2. a. If Argyle expects to produce 3,600 sweaters per month, should he build a smaller factory or a larger factory? Briefly explain? b. If Argyle expects to produce 5,000 sweaters per month, should he build a smaller factory or a larger factory? Briefly explain. c. If the average cost of producing sweaters is lower in the larger factory when Argyle produces 6,500 sweaters per week, why isn't it also lower when Argyle produces 4,000 sweaters per week?