Because of asymmetric information, most used cars that are offered for sale will be sold for prices that are greater than their true value. Because of this fact, the used car market falls victim to
A) the free-rider problem.
B) deadweight loss and economic inefficiency.
C) a surplus of used cars.
D) adverse selection.
Answer: D
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Aggregate supply is
A) the horizontal summation of all supply curves for services. B) the sum of all planned production in the economy. C) the stock of all goods in the economy. D) the summation of all product supply curves.
A decrease in the supply of steel results in a shortage of steel at the original equilibrium price. Explain how market forces will act to eliminate the shortage
What will be an ideal response?
The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone). The current price is 35ยข per minute. If the price were to increase by ten cents per minute, consumer surplus would
A) fall to $820. B) fall by $84. C) fall by $58. D) fall to $369.
In some countries, prices in stores are listed in terms of U.S. dollars, rather than in units of the local currency. That's most likely because
A. there is no other store of value. B. interest rates are higher using U.S. dollars than using the local currency. C. the country has experienced high rates of inflation. D. the country's political system is unstable.