Which of the following is most subject to the lemons problem?
A) credence goods
B) homogeneous goods
C) search goods
D) inferior goods
Answer: A
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Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's risk level rises relative to England and nothing else changes, then
a. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc. b. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market falls, causing an uncertain change in the value of the Swiss franc. c. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate. d. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc. e. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market rises, causing an uncertain change in the value of the Swiss franc.1.The balance of payments: a. Includes exactly the same transactions that are included in the foreign exchange market. b. Is the sum of all financial payments between residents of one nation and residents of the rest of the world. c. Is a flow concept. d. All the above.
This figure displays the choices and payoffs (company profits) of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to make a profit at such low prices. The Rock Shop is trying to decide whether or not it should enter the market and compete with MiiTunes.The game between music stores in the figure shows us that:
A. neither store has a dominant strategy, and so the outcome cannot be predicted. B. only The Rock Shop has a dominant strategy, and so the outcome cannot be predicted. C. only MiiTunes has a dominant strategy, and so the outcome cannot be predicted. D. None of these statements is true.
If full employment GDP is greater than equilibrium GDP there is
A. an inflationary gap. B. a deflationary gap. C. both an inflationary gap and a deflationary gap. D. neither an inflationary gap nor a deflationary gap.
People derive utility in their lives from consuming goods (all other goods), g, and clean air (measured as the number of particulates removed per m3), a, as measured with the utility function U(g,a) = g0.6a0.4. The price index of consumer goods equals $20 per day. Income equals $1000. What is likely to happen to the number of asthma cases as the price of clean air (abatement cost) increases from
$10 to $20? A) Asthma cases decrease because the particulates per m3 increase by 2 units. B) Asthma cases increase because the particulates per m3 decrease by 2 units. C) Asthma cases increase because the particulates per m3 increase by 2 units. D) There is not enough information to answer this question.