The use of signals in a market economy
a. makes everyone better off, even those people who choose not to obtain the signal.
b. prevents the economy from reaching an equilibrium.
c. lowers efficiency because the signals waste resources.
d. is one way that the principal-agent problem can be avoided.
c. lowers efficiency because the signals waste resources.
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When the price of tablet devices decreased in the 2010s, there was an increase in the demand for computing apps because tablet devices and computing apps are
A) substitute goods. B) capital goods. C) inferior goods. D) complementary goods.
A defendant believes there is a 70 percent chance that the plaintiff will win $200,000, a 10 percent chance the plaintiff will win $150,000 and a 20 percent chance the plaintiff will lose and receive nothing (zero). If the defendant's litigation cost is $100,000, what is the defendant's expected loss from the litigation?
A) $150,000 B) $255,000 C) $300,000 D) $155,000
A vector autoregression
A) is the ADL model with an AR process in the error term. B) is the same as a univariate autoregression. C) is a set of k time series regressions, in which the regressors are lagged values of all k series. D) involves errors that are autocorrelated but can be written in vector format.
Figure 11-6
The profit-maximizing monopolist in Figure 11-6 will produce ____ units of output.
A. Q1 B. Q2 C. Q3 D. Q4