Because of the lack of buyer's information about a perfectly functioning used car:
A. the market will eventually become saturated with high quality cars.
B. sellers of perfectly functioning used cars will be more likely to enter the market.
C. the buyer will pay less than what it's worth because of the chance that it will be a lemon.
D. All of these statements are true.
Answer: C
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Suppose an economy has an increase in labor input of 60 percent, while output has increased by 100 percent. Assuming no change in total factor productivity, calculate the percentage increase in the capital input
(Use the Cobb-Douglas production function Y = A .)
The theory of monopolistic competition predicts that in long-run equilibrium a monopolistically competitive firm will:
a. produce at the level in which price equals long-run average cost. b. operate at minimum long-run average cost. c. overutilize its insufficient capacity. d. none of these.
If realized capital gains are counted as household savings, then the saving rate in the US over the past 2 decades has
a) fallen sharply from 10% to nearly zero b) hovered near zero and occasionally been negative c) remained roughly steady at 10% d) increased sharply e) varied dramatically as the stock market has fluctuated
The principle stating that, for virtually all goods and services, there is a negative relationship between price and quantity demanded, all other things unchanged, is the law of:
A) supply. B) demand. C) scarcity. D) increasing opportunity costs.