Recall the Application about the free-agent market for professional baseball pitchers to answer the following question(s).Recall the Application. Why is there adverse selection in the baseball pitcher free-agent market?
What will be an ideal response?
The pitchers' old team knows more about the pitcher than the new team does. The old team chooses to re-sign the healthier pitchers and let the less healthy ones go to the new team.
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Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve. As a result
A) the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase. B) both the equilibrium price and quantity of MP3 players will decrease. C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease. D) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.
Suppose that a firm has to pay a 10% tax on its total revenue. This has the effect of
a. flattening marginal cost. b. increasing marginal revenue. c. decreasing marginal cost. d. decreasing marginal revenue.
One of the key reasons why monopolies exist is:
A. there is easy entry and exit into and out of the market. B. the goods sold are highly inaccessible to buyers. C. geographical differences. D. there are barriers to entry into the market.
Which of the following is characteristic of a monopolistically competitive firm?
A. The firm faces an upward-sloping demand curve. B. The firm faces an inelastic demand curve. C. The firm faces a horizontal demand curve. D. The firm produces a differentiated product.