How does adverse selection affect the economic efficiency of the used car market?
What will be an ideal response?
Since potential buyers have a difficult time distinguishing good cars from lemons, the price of good cars declines to below its true value.
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In the income-expenditure framework, if planned aggregate expenditures are less than real gross domestic product (GDP), _____
a. saving will increase b. the price level will increase c. inventories will increase d. inventories will decrease e. consumption will decrease
Answer the following statement true (T) or false (F)
1) Marginal resource (labor) cost will exceed the wage rate when there is imperfect competition in the hire of labor. 2) The rising general level of real wages in the United States has occurred because growing population has increased the supply of labor relative to the demand for it. 3) Marginal resource (labor) cost will always exceed the wage rate when the employer is selling its product in an imperfectly competitive market. 4) A monopsonistic employer may sell its product in a competitive market.
Recall the Application about setting the price of tickets for Major League Baseball games to answer the following question(s).According to the Application, the marginal revenue from ticket sales for a typical Major League Baseball team is:
A. positive. B. zero. C. negative. D. infinity.
Refer to the above figure. Profits will be positive
A. when the price equals $1. B. at prices between $1 and $2. C. when the price is above $2. D. when the price equals $2.