Explain how product liability laws can reduce adverse selection
What will be an ideal response?
Product liability laws force producers to compensate consumers that purchase a defective product. This eliminates the producer's ability to profit from asymmetric information.
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Purchases by American tourists in other countries increase GDP for both the country in which the purchase was made and for the U.S., since a U.S. citizen carried out the expenditure
a. True b. False Indicate whether the statement is true or false
Which would be most characteristic of oligopoly?
A. Product standardization. B. Mutual interdependence. C. Easy entry into the industry. D. Many large producers.
Refer to the graph below, showing the long-run supply and demand curves in a purely competitive market. The curves suggest that this industry is:
A. A constant-cost industry
B. Increasing-cost industry
C. Decreasing-cost industry
D. Not possible, because the supply curve always slopes up
Which of the following statements is true?
A. When the forces of supply and demand determine for whom goods are produced in a society, an equitable distribution of income will naturally result. B. An external benefit will occur when a third party enjoys some of the benefits derived from production of some good or service. C. One of the roles of the United States government is to provide a job to any able-bodied person who wants a job. D. The price mechanism will work well if there are at least two companies that are competing against each other.