Figure 14.3 represents the market for used refrigerators. Suppose buyers are willing to pay $300 for a plum (high-quality) used refrigerator and $100 for a lemon (low-quality) used refrigerator. If buyers believe that 50% of used refrigerators in the market are lemons (low quality), what fraction of used refrigerators sold will actually be lemons (low quality)?
A. 50/250
B. 50/300
C. 250/300
D. All of the refrigerators sold will be lemons.
Answer: C
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If the agent has more information than the principal and there is only one state of nature, then
A) efficiency in both production and risk-bearing can be achieved. B) only efficiency in production can be achieved. C) only efficiency in risk-bearing can be achieved. D) neither efficiency in production nor efficiency in risk-bearing can be achieved.
The extra cost associated with producing or consuming the next unit is called the:
A. variable cost. B. marginal cost. C. utility cost. D. sunk cost.
Which of the following could be the cross-price elasticity of demand for two goods that are complements?
a. -1.3 b. 0 c. 0.2 d. 1.4
Figure 4-4
Given the demand and supply conditions shown in , if the government imposes a price ceiling of a, which of the following would be true?
a.
Consumers would want to buy r units.
b.
Consumers would want to buy s units.
c.
Producers would wish to sell s units.
d.
Producers would wish to sell r units.