Figure 9.2 represents the market for used cameras. Suppose buyers are willing to pay $125 for a plum (high-quality) used camera and $25 for a lemon (low-quality) used camera. If buyers believe that all of the used cameras in the market are lemons (low quality), what number of used cameras sold will actually be lemons (low quality)?
A. 10
B. 15
C. 20
D. 25
Answer: B
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When both firms have dominant strategies
A) the outcome is called a dominant strategy solution. B) joint profits are maximized. C) there are multiple Nash equilibria. D) there is a prisoners' dilemma.
Usually, price elasticities of supply are
A) positive, because higher prices yield larger quantities supplied. B) considered short-run adjustments due to supply constraints. C) ordinarily a negative number based on the law of supply. D) an inverse relationship between price and quantity supplied.
The goal of a seller is primarily to:
A) maximize sales. B) maximize profits. C) minimize costs. D) minimize consumer surplus.
If the minimum points on all the possible short-run average total cost curves become successively lower as quantity of output increases, then
a. the firm should try to produce less output b. total fixed costs are constant along the LRATC curve c. there are economies of scale d. the firm is probably having significant management problems e. when output is doubled, total costs are doubled