Suppose you see a 2006 Scion xB Sport Wagon advertised in the local newspaper for $4,500. If you knew the car was reliable, you would be willing to pay $6,000 for it. If you knew the car was unreliable, you would only be willing to pay $2,500 for it
Under what circumstances should you buy the car at the asking price?
What will be an ideal response?
Because of the lemons problem you should buy the car only if the advertisement is placed by a car dealer with a good reputation or by an individual you know well enough to trust, if you can cheaply determine that it isn't a lemon (for example, by an inspection), or if you'll receive a solid warranty against defects.
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During a business cycle recession, total production ________ and total employment ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
Refer to Table 2-5. Estonia has a comparative advantage in the production of
A) neither product. B) lumber. C) cell phones. D) both products.
Figure 3-9
Given the demand (D) and supply (S) for gasoline in , if the price of gasoline were $1 per gallon,
a.
consumers would wish to purchase more than was being supplied.
b.
producers would be supplying more than consumers wished to purchase.
c.
the quantity consumers wished to purchase would equal the quantity that producers wished to supply.
d.
there would be a tendency for the price of gasoline to fall.
A major characteristic of monopolistic competition is:
A. a relatively large number of firms selling the product. B. relatively easy entry into an industry but a relatively difficult exit from the industry. C. a high degree of collusion among firms. D. mutual interdependence.