Figure 9.3 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 plums (high quality)?
A. 50/250
B. 50/300
C. 250/300
D. None of the refrigerators sold will be plums.
Answer: B
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The principle of comparative advantage states that total output is greatest when each product is made by the country that has the _____________.
Fill in the blank(s) with the appropriate word(s).
Because of NAFTA, the U.S. shifts some of its imports from Japan to Mexico (a member of NAFTA). This is an example of
A. trade deflection. B. trade diversion. C. protectionism. D. rules of origin.
The demand curve for labor of a monopolist
A) is horizontal even though the demand curve for labor for a competitive firm is downward sloping. B) slopes down for the same reason as the demand curve for labor of a perfectly competitive firm. C) slopes down because of the law of diminishing marginal product and because the monopolist must lower prices to sell additional units of the good. D) slopes upward because monopolists use more capital than do perfectly competitive firms.
Suppose the Fed sells $10 million in government securities to a commercial bank. If the required reserve ratio is 0.2, what is the maximum amount by which checkable deposits in the banking system can change?
a. +$10,000,000 b. ?$10,000,000 c. +$50,000,000 d. ?$50,000,000 e. +$20,000,000