Even if your college degree is irrelevant to an employer's needs, your high GPA might still get you the job because
A) the firm is not a profit maximizer.
B) your GPA sends a signal about your quality as a worker.
C) the firm will most likely make an adverse selection.
D) the high GPA eliminates the possibility of moral hazard.
B
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In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy?
A) perfect competition B) monopolistic competition C) oligopoly D) monopoly E) perfect competition and monopolistic competition
If the firm in the given graph were to maximize profits, it would:
These are the cost and revenue curves associated with a firm.
A. produce Q1 and charge P3.
B. cause deadweight loss.
C. earn zero economic profits.
D. All of these statements are true.
If you know that you can afford a $500 per month car payment for the next 48 months, the interest rate is positive, and you have found a car dealer who will agree to a zero down payment, you will
A. be able to afford something less than a $24,000 car. B. be able to afford a $24,000 car (which is exactly $500 × 48). C. be able to finance a more expensive car when the interest rate is high. D. be able to afford a $25,000 car (which is more than $500 × 48).
Assume there are two companies. Both issue stock, but one is high quality and the other low quality. If potential investors cannot distinguish the quality of the company:
A. this is an example of moral hazard and the shares of both companies will cease to trade. B. the shares of both companies will trade on the market. C. the shares of the high quality firm will disappear from the market. D. the shares of the low quality firm will disappear from the market.