Figure 14.1 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 have pessimistic expectations about the used bikes in the market, how many used plums (high-quality used bikes) will be sold?
A. 0
B. 8
C. 12
D. 16
Answer: A
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The high-school dropout rate typically declines during a recession because
A) more money flows into the public sector as the flow declines in the private sector. B) teachers become more readily available during a recession. C) the opportunity cost of continuing in school falls in a recession. D) the demand for education rises in a recession. E) the legal school-leaving age is a function of the unemployment rate.
Briefly explain the relationship between market price and a firm's profitability in a perfectly competitive market
According to the crude quantity theory of money, if M rises by 8%, Q will
A. fall by 8%. B. fall by less than 8%. C. stay the same. D. Rise by less than 4%.
Which of the following is true regarding the effect of deficits from 1980 to 2005 in the United States?
A. They did not lead to substantial inflation because the Fed did not monetize the deficits. B. They did not lead to substantial inflation because the Fed did monetize the deficits. C. They led to substantial inflation because the Fed did not monetize the deficits. D. They led to substantial inflation because the Fed did monetize the deficits.