Sarah went to a store that sells used goods to buy a camera. She was looking at different models when the store manager asked her about the maximum price that she would pay
Because it was impossible to know the quality of the cameras, Sarah lowered her willingness to pay to $200, although she values a used camera of good quality at $300. If the seller values a camera of good quality at $250, what is most likely to happen in this case?
Sarah values a used camera of good quality at $300, while the seller values it at $250. If Sarah had perfect information about the quality of each camera, trade would have taken place at a price between $250 and $300. However, because Sarah is unaware of the quality of the cameras and has a lower value for a camera of poor quality, she is willing to pay only $200. At $200, the seller will not be willing to give her a good-quality camera because he values it at $250. As a result, Sarah will end up buying a camera of poor quality. Such a phenomenon is commonly known as adverse selection.
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Lionfish is an aquatic invasive species in the southeastern U.S. and the Caribbean. Current removal policies focus on harvesting the lionfish for human consumption
Assuming that lionfish is a substitute for snapper, what will likely happen to fishing efforts for lionfish if the price of snapper increases? A) Fishing efforts will increase. B) Fishing efforts will decrease. C) Fishing efforts will remain the same if supply is perfectly inelastic. D) A and C.
Which is a distortion (a loss of social surplus) associated with a monopolist's inability to observe consumer types when constructing a nonlinear pricing scheme?
a. The monopolist must expend more resources on market research. b. All bundles involve inefficiently low quantities. c. Some but not all bundles involve inefficiently low quantities. d. Quantities aren't distorted, but prices extract too much consumer surplus.
Jake, Sr. sells the family business, a factory that produces snake oil, to Jake, Jr., for $100, even though the factory has been assessed at $400,000. How will this transaction affect GDP?
A. Investment will increase by $100. B. Investment will increase by $400,000. C. Consumption will increase by $400,000. D. GDP will not be affected by the transaction.
Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. For this economy to move from Point B to Point C so that an additional 20 OLED televisions could be produced, production of LCD televisions would have to be reduced by
A. more than 30. B. exactly 60. C. fewer than 30. D. exactly 30.