When the market price is set below the equilibrium price:
A. the market is not efficient.
B. total surplus is not maximized.
C. producer surplus is decreased.
D. All of these are true.
D. All of these are true.
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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) adverse selection. C) deadweight loss and economic inefficiency. D) a surplus of used cars.
A perfectly competitive firm has a random marginal cost with a 30 percent chance of a high marginal cost of $50 and a 70 percent chance of a low marginal cost of $40. What is the firm's expected marginal cost?
A) $48 B) $46 C) $43 D) $45
The price elasticity of demand along a linear demand curve is
A) more elastic at higher prices than at low prices. B) infinite. C) one. D) constant.
An outward shift in the demand curve for land will
a. make previously zero-rent land profitable. b. induce people to begin to use land more extensively. c. force reductions in rents. d. be accompanied by a shift in the supply of land.