In which of the following cases did someone use adverse selection?
a. Mr. Wong truthfully told Barbara he did not know how many horsepower his truck had when he sold it to her.
b. Neither Mrs. Lin nor Mr. Hill knew anything about the antique desk in Mrs. Lin’s attic, but they both made up lies about it when Mr. Hill bought it.
c. Miles knew that the boat motor he sold Mr. Sutton had a bad water pump and that Mr. Sutton did not know it, but Miles still did not mention it.
d. Ms. Romano and Mr. Charles are both coin experts who knew exactly the worth of the silver dollar that Ms. Romano sold to Mr. Charles.
c. Miles knew that the boat motor he sold Mr. Sutton had a bad water pump and that Mr. Sutton did not know it, but Miles still did not mention it.
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A monopoly creates a deadweight loss because the monopoly
A) sets a price that is too low. B) makes a normal profit. C) does not maximize profit. D) produces less than the efficient quantity. E) produces more than the efficient quantity.
If there is always a three-for-one tradeoff between goods X and Y, then the PPF between X and Y is
A) a downward-sloping curve that is bowed outward. B) a downward-sloping curve that is bowed inward. C) a downward-sloping straight line. D) an upward-sloping straight line.
Market failure occurs when not every consumer who wants a good can obtain it.
Answer the following statement true (T) or false (F)
Under what circumstances would a monopolist price be as low as the price that would prevail in a perfectly competitive market?
What will be an ideal response?