Used car buyers will believe that a car is of good quality when the seller signals the car's high quality by offering a warranty when
A) a warranty on a lemon is costly to the seller.
B) warranties are offered on all cars.
C) warranties are only offered on lemons.
D) a warranty on a good car is a false signal.
A
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The opportunity cost of a firm using its own capital is
A) economic depreciation. B) self-ownership depreciation. C) economic loss. D) normal loss. E) capital loss.
Shirking is most likely to occur when
A) the principal monitors the agents extensively. B) employees are paid an hourly wage. C) a piece rate contract is used. D) an assembly line is used for production.
A policy that raises taxes or reduces government spending is called:
A. a contractionary monetary policy. B. a contractionary fiscal policy. C. an expansionary monetary policy. D. an expansionary fiscal policy.
Figure 4-22
Refer to . Suppose the same S and D curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the buyers of the good, rather than the sellers, are required to pay the tax to the government. Now,
a.
the burden on buyers will be larger than in the case illustrated in .
b.
the burden on sellers will be smaller than in the case illustrated in .
c.
a downward shift of the demand curve replaces the upward shift of the supply curve.
d.
All of the above are correct.