Suppose a competitive market with adverse selection has settled into a pooling equilibrium where everyone is offered the same price. If firms then screen consumers, the outcome may and may not be more efficient.
Answer the following statement true (T) or false (F)
True
Rationale: If screening costs are low, then it is efficiency enhancing to screen; if they are too high then not.
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Suppose a bond promises to pay its holder $100 a year forever. The interest rate on the bond rises from 4 percent to 5 percent. The price of the bond
A) falls from $2,500 to $2,000. B) does not change because it is not affected by the interest rate. C) falls from $25,000 to $20,000. D) rises from $2,000 to $2,500.
Which of the following is the best example of variable cost?
a. depreciation on a building b. property taxes c. wages d. rent paid for one’s building
In the United States, which agency determines whether domestic firms have been harmed by subsidies and dumping or by a sudden surge in imports and whether protection is warranted?
What will be an ideal response?
In the expression Pr(deny = 1| P/I Ratio, black) = ?(-2.26 + 2.74P/I ratio + 0.71black), the effect of increasing the P/I ratio from 0.3 to 0.4 for a white person
A) is 0.274 percentage points. B) is 6.1 percentage points. C) should not be interpreted without knowledge of the regression R2. D) is 2.74 percentage points.