Suppose you see a 2012 Ford Mustang GT advertised in the local newspaper for $15,000. If you knew the car was reliable, you would be willing to pay $17,000 for it. If you knew the car was unreliable, you would only be willing to pay $12,000 for it
Under what circumstances should you buy the car?
Because of the lemons problem you should buy the car only if the advertisement is placed by a car dealer with a good reputation or by an individual you know well enough to trust, if you can cheaply determine that it isn't a lemon (for example, by an inspection), or if you'll receive a solid warranty against defects.
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The Toys-R-Danger-Us Toy Company can produce 500 water pistols for a total cost of $1,400 . The company can also produce 1,000 water pistols for a total cost of $3,000 . but it would have costs of $200 even if it produced no water pistols. Which of the following is true?
a. Total cost is increasing at a decreasing rate. b. Total cost is increasing at a constant rate. c. Marginal cost is positive and increasing as output increases. d. Variable cost is positive and decreasing as output increases. e. Fixed cost is positive and decreasing as output increases.
An important difference between a perfectly competitive firm and a monopolist is that
a. the perfectly competitive firm tends to be larger b. only the monopolist attempts to maximize profit c. only the perfectly competitive firm maximizes profit d. the perfectly competitive firm faces a horizontal demand curve and the monopolist faces a downward-sloping demand curve e. only the monopolist maximizes profit at the quantity where marginal cost equals marginal revenue
Under long-run perfect competition, which of the following are the same (equal) at all levels of output?
a. Price and marginal cost. b. Price and marginal revenue. c. Marginal cost and marginal revenue. d. All of these.
Which of the following characteristics apply to both monopoly and monopolistic competition? a. Marginal revenue exceeds marginal cost at equilibrium
b. Average revenue exceeds both marginal cost and marginal revenue at equilibrium. c. Marginal revenue exceeds average revenue at equilibrium. d. Marginal revenue and marginal cost are equal and exceed price at equilibrium.