One result of adverse selection in the market for used cars is:
A. more lemons (low quality) may be offered for sale than plums (high quality).
B. more plums (high quality) may be offered for sale than lemons (low quality).
C. few lemons (low quality) are sold.
D. no used cars are sold.
Answer: A
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If a person receives a consumer’s surplus from the purchase of a good, it must be that
A. the amount that the person paid minus the amount that this person values that good is greater than zero. B. the amount that the person values the good minus the amount that this person paid for that good is greater than zero. C. the value is negative because consumers have diminishing marginal utility. D. result is based solely on the supply of the good.
A major difference between monopolistic competition and perfect competition is
A) that products are not standardized in monopolistic competition unlike in perfect competition. B) the barriers to entry in the two markets. C) the degree by which the market demand curves slope downwards. D) the number of sellers in the markets.
In a risk-benefit analysis of pesticide use,
a. benefits are the gains from eliminating or reducing pesticide use b. benefits can be measured as the change in producer and consumer surpluses linked to increasing supply due to enhanced crop yields c. the data needed to estimate benefits are readily obtainable d. secondary benefits, such as improved worker productivity, are not relevant
If marginal cost is less than average cost, at current levels of production,
a. average cost is increasing with output. b. average cost is decreasing with output. c. total cost is decreasing. d. average cost is at a minimum.