A toy manufacturer is experiencing quality problems on its assembly line. Every defective toy that leaves the factory costs the firm $20. The firm has decided to hire quality inspectors to catch defective toys before they leave the factory.
Given the above information, if the cost of each defective toy rises to $50, while inspectors are paid $150 a day, how many inspectors should the firm hire?
A. 3
B. 4
C. 5
D. 6
Answer: C
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Based on the table above,
a. What is the equilibrium price level and real GDP? b. If potential GDP is $11.0 trillion, what does that imply about the economy's level of employment? c. If potential GDP is $9.0 trillion, what does that imply about the economy's level of employment?
Why is the study of asymmetric information associated with the market for "lemons"?
A) Potential buyers of used cars have difficulty separating good used cars from bad used cars; bad used cars are often referred to as "lemons." B) Because there is little advertising in the market for lemons, buyers have difficulty determining the quality of lemons before they are purchased. C) Sellers of citrus fruit — lemons, oranges, grapefruit — know the difference between bad fruit and good fruit; buyers do not have this information. D) Most sellers of used cars have less information about their cars than the dealers who buy them; used cars are often referred to as "lemons."
Suppose y = k1/2, total factor productivity is constant and equal to 1, s = 0.40, and d = 0.10. When the economy reaches the steady state, real GDP per worker is ________
A) $2 B) $4 C) $8 D) $16
Within rich economies, there is strong evidence of convergence ________
A) for regions within a country B) with developing economies C) leading to military conflict D) of capital stocks, rather than output