Figure 14.4 represents the market for used 12 megapixel digital cameras. Suppose buyers are willing to pay $400 for a plum (high-quality) used digital camera and $200 for a lemon (low-quality) used digital camera. If buyers believe that 50% of used digital cameras in the market are lemons (low quality), what is consumers' willingness to pay ($W)?
A. $100
B. $200
C. $300
D. $400
Answer: C
You might also like to view...
Using historical statistics is likely to produce accurate estimates of demand curves since such studies have large amounts of data to draw on.
Answer the following statement true (T) or false (F)
The above figure shows the reaction functions for two pizza shops in a small isolated town. The Cournot equilibrium is at point
A) a. B) b. C) c. D) d.
As an individual moves northwest along an indifference curve substituting more and more Y for X, his or her MRS of X for Y
a. increases. b. decreases. c. stays the same. d. changes in a way that cannot be determined.
Professor Plum, who earns $100,000 per year, read in the paper today that the university pays its basketball coach one million dollars per year in exchange for his agreement to remain at the university for at least three more years. The coach earns more than Professor Plum because:
A. the demand for sporting events exceeds the demand for college degrees. B. universities value sports more than academics. C. the coach has more human capital than does Professor Plum. D. the coach is able to earn economic rent due to his unique talents.