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. If buyers believe that 50% of the used bikes are lemons (low quality), how much will they be willing to pay for a used bike?
A. $50
B. $80
C. $125
D. $200
Answer: C
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The equilibrium level of regulation is where the marginal political benefits to the special interests are equal to the marginal political costs of the foregone regulation
a. True b. False
An increase in consumers' incomes will have what effect on the equilibrium in the restaurant meals market?
a. Price will increase, and quantity will increase. b. Price will decrease, and quantity will increase. c. Price will increase, and quantity will decrease. d. Price will decrease, and quantity will decrease. e. Price will increase, and quantity will stay the same.
In which of the following cases has political corruption definitely occurred?
A. Political candidates accept campaign contributions from people B. Government agencies impose fines for such things as traffic violations C. A bureaucrat allows someone to look at confidential documents for an informal fee D. A government agency receives donations for distribution to charity
In practice, one of the principal problems with aggregate demand management is that
A) changes in aggregate demand do not affect output. B) changes in aggregate demand cannot reduce unemployment. C) changes in aggregate demand are highly inflationary. D) stabilization policies could increase aggregate demand too much and at the wrong times.