Suppose that there are only two types of used cars, peaches and lemons and that used cars are pure experience goods. Peaches are worth $10,000, and lemons are worth $6,000. Three fourths of all used cars are peaches, and one fourth are lemons
In a market with no signals, for instance, a market without warranties, the average value of cars actually sold will be A) $6,000.
B) $7,000.
C) $9,000.
D) $10,000.
A
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Stagflation is defined as:
a. the simultaneous occurrence of high inflation and high unemployment. b. high inflation accompanied by falling interest rates. c. declining GDP accompanied by a stable price level. d. a persistent decline in the price level that is unresponsive to monetary and fiscal policies.
Which of the following groups rejects the view that government policy can reduce the rate of unemployment even in the short run because that policy would be undermined by people's incorporation of the anticipated consequences of the policy into their present decisions?
a. classical school b. Keynesian school c. neo-Keynesian school d. rational expectations school e. supply-side school
High tariffs and restrictive quotas will encourage rapid economic growth.
a. true b. false
The Clear Plastic Company's plant discharges large quantities of toxic chemicals into some groundwater sources. Residents in the surrounding area have higher medical bills because of Clear Plastic's pollution. These additional medical costs represent
A) a positive externality. B) a negative externality. C) the company's private costs. D) the neighboring families' external costs.