In equilibrium, consumers will incur costs to signal their type (in markets with adverse selection) only if this results in a price that is lower than the pooling equilibrium price.
Answer the following statement true (T) or false (F)
False
Rationale: It is possible to have equilibria in which all consumers -- both high and low cost -- signal that they are low cost. Thus, no information is revealed and the pooling price remains. (This can happen when the cost of falsely signaling information is too low -- and when firms believe that no signal is equivalent to a signal of a high cost type.)
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Refer to the table below. Busy Betty sells her cakes for $20 each and her constant marginal cost to produce each cake is $12, which is equal to her (constant) average total cost. What is her expected marginal benefit from holding the 20th cake in inventory?
The above table shows the probability distribution of cake sales at Busy Betty's Bakery.
A) $7.80
B) $8.00
C) $7.20
D) $12.80
Among the criteria used for identifying priority contaminants is that
a. the pollutant must occur in a private water system b. thecontaminant might have a negative effect on the ecology c. the pollutant must be a microorganism d. the contaminant may have an adverse effect on human health e. none of the above
According to the rule of 70, if the interest rate is 10 percent, about how long will it take for the value of a savings account to double?
a. about 6.3 years b. about 7 years c. about 7.7 years d. about 10 years
According to classical macroeconomic theory, the price level, but not real GDP, are affected by changes in the
a) money supply. b) labor supply. c) supply schedule. d) aggregate supply.