Figure 14.3 represents the market for used refrigerators. Suppose buyers are willing to pay $300 for a plum (high-quality) used refrigerator and $100 for a lemon (low-quality) used refrigerator. Initially buyers believe that 50% of used refrigerators in the market are lemons (low quality). Compared to the outcome with neutral expectations, how many fewer refrigerators are sold in equilibrium?
A. 50
B. 125
C. 175
D. 250
Answer: C
Economics
You might also like to view...
In a two-person exchange, if the price offered to the seller is less than the opportunity cost of production, the exchange will not take place
Indicate whether the statement is true or false
Economics
Increases in the general price level are primarily a macroeconomic issue
a. True b. False
Economics
What would the Balance on Goods and Services equal given the following information?Government Taxes= $700; Saving= $100; Gross Private Domestic Investment= $400; Government Spending= $600
a. It is impossible to tell. b. +$1,800 c. +$200 d. -$200 e. +$800
Economics
In 2014, the largest exporter in the world was
A) Japan. B) the United States. C) Germany. D) China.
Economics