Figure 9.1 represents the market for used bikes. Suppose buyers are willing to pay $200 for a plum (high-quality) used bike and $50 for a lemon (low-quality) used bike. Initially buyers believe that 50% of used bikes in the market are lemons (low quality). Compared to the outcome with neutral expectations, how many fewer bikes are sold in equilibrium?
A. 8
B. 12
C. 18
D. 22
Answer: C
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Which one of the following will not cause the production possibilities curve to shift outward?
a. improvements in the stock of land b. increased educational opportunities c. a very low birth rate d. increased entrepreneurial activity
Oligopolistic firms are the only ones that consider their rivals' actions when making decisions about output and price
a. True b. False
In a market economy, the money incomes of individuals depend primarily upon:
A. government policies in setting wages and interest rates. B. the amount of college education the individuals have. C. the value and amounts of the productive resources the individuals possess. D. who you know and how well you know them.
Based on the above figure, if countries "A" and "B" faced the production possibilities curves above, both countries would benefit if
A. they both produced both industrial and agricultural goods. B. they did not trade. C. "B" produced industrial goods, and "A" produced agricultural goods. D. "A" produced industrial goods, and "B" produced agricultural goods.