Market signals are
A. used to differentiate those who will drive equally carefully whether or not they have auto insurance from those who drive less carefully when they have insurance.
B. actions taken by buyers and sellers to communicate quality in the presence of perfect information.
C. used to distinguish between high and low quality and help correct the adverse selection problem.
D. only strong if obtaining the signal is more costly for individuals with valued traits than for those with non-valued traits.
Answer: C
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If a macroeconomist studying the causes of unemployment suspects that changes in technology might play a role, then this macroeconomist is at which step in the process of developing an economic model?
A) Identify the exogenous variables. B) Identify the endogenous variables. C) Compare the model with the data. D) Conduct prediction and policy analysis. E) Develop a model.
Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is:
a. inelastic, and total revenue will increase. b. elastic, and total revenue will increase. c. inelastic, and total revenue will decrease. d. elastic, and total revenue will decrease. e. unit elastic, and total revenue will remain the same.
Which of the following is not correct?
a. Toys for Tots, a program that collects new toys to distribute to poor children at Christmas, is an example of an in-kind transfer. b. Supporters advocate the use of in-kind transfers because they restrict the ability of recipients to purchase alcohol and drugs. c. Critics argue that in-kind transfers are inefficient and disrespectful. d. For a program to qualify as an in-kind transfer, it must have government approval.
Deadweight loss exists when a market is operated by a monopoly because the monopolist produces at an output level that is ____ the socially optimal level
Fill in the blank(s) with the appropriate word(s).