A warranty on a used car is a credible signal of quality because:
A. many used cars come with warranties.
B. it indicates the car is of average quality.
C. it would cost the seller too much to honor a warranty on a low-quality car.
D. sellers who offer warranties are more honest than most people.
Answer: C
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You consume only steak and lobster. Your income effect from a drop in the price of lobster is measured by a movement along your indifference curve between steak and lobster
Indicate whether the statement is true or false
Under a market system, an individual’s income is ultimately determined through
a. education. b. training. c. productivity. d. the pricing system.
A statement of assets and liabilities of any business entity is called
A) a balance sheet. B) an income statement. C) a statement of net worth. D) a cash flow statement.
How would the elimination of a sales tax affect the market for a product that had been subject to the tax?
A) The equilibrium price for the product would fall by less than the amount of the tax. B) The reduction in government revenue from the tax would be made up by an increase in property taxes. C) The supply of the product would become more elastic. D) The demand for the product would rise and the equilibrium price would fall by the amount of the tax.