Suppose a competitive market with adverse selection has settled into a pooling equilibrium where everyone is offered the same price. If full markets are re-established through signals, the new equilibrium will be more efficient than the original pooling equilibrium.
Answer the following statement true (T) or false (F)
False
Rationale: It depends on how costly it is to send signals.
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Producing paper creates pollution. There is no externality in the consumption of paper. The efficient quantity of paper is when the
A) marginal social benefit of paper is equal to zero. B) marginal social cost of the pollution from making paper is equal to zero. C) marginal social benefit of paper is equal to the marginal social cost of paper. D) marginal private cost of the pollution from making paper is equal to zero.
When the quantity of money supplied equals the quantity of money demanded, then
A) the goods market is in equilibrium. B) the asset market is in equilibrium. C) the money market is in equilibrium. D) the money market is not in equilibrium.
A rightward shift in the demand curve for domestic assets can be caused by ________
A) a decrease in the domestic real interest rate B) a rightward shift in the supply curve for domestic assets C) a leftward shift in the supply curve for domestic assets D) an increase in the domestic real interest rate
Unanticipated inflation always benefits somebody, so the overall cost cannot be higher than it is for anticipated inflation. Comment
What will be an ideal response?