An approach that can be taken by someone directly involved in a transaction to solve the problems caused by information asymmetry is:
A. screening.
B. mandating that information be shared.
C. proofing.
D. racial discrimination.
A. screening
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In the basic competitive model of labor markets, we assume that
A. all compensation is monetary and there are some fringe benefits included. B. firms have discretion over the wages they pay to their employees. C. all compensation is monetary and there are no fringe benefits. D. market wage rates are not costlessly observable.
The above table has data from the nation of Media. Based on these data, the marginal propensity to consume is
A) 0.67. B) 0.25. C) 1.33. D) 1.50. E) 0.75.
The price elasticity of demand for new cars is 1.2. Hence, a 10 percent price increase will
A) decrease the quantity of new cars demanded by 1.2 percent. B) increase consumer expenditure on new cars by 1.2 percent. C) decrease the quantity of new cars demanded by 12 percent. D) increase consumer expenditure on new cars by 12 percent.
A video rental store rents old movies for $1.50 per day. On average, 300 movies are rented each day. The store receives several copies of a new smash movie just released in video and decides to rent these movies at $3.50 per day
Now, 400 movies are rented each day. Thus, though the average rental price of a movie increased, the quantity rented increased. Does this mean that the law of demand does not hold for this market?