The "lemons problem" exists in the market for goods because
A) sellers tend to try to take advantage of buyers.
B) buyers tend to try to take advantage of sellers.
C) differences in the quality of the goods being exchanged.
D) of moral hazard.
C
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The firm in the figure above is ________ that is equal to ________
A) making an economic profit; $5.14 × 7 B) making an economic profit; $3.00 × 7 C) incurring an economic loss; $5.14 × 7 D) incurring an economic loss; ($5.14 - $3.00 ) × 7 E) making an economic profit; ($5.14 - $3.00 ) × 7
If the demand for a commodity is perfectly elastic, a downward shift in supply will result in lower prices
Indicate whether the statement is true or false
If the social cost of producing a good or service exceeds the private cost
A) a positive externality exists. B) the sum of consumer surplus and producer surplus is maximized. C) the market achieves economic efficiency. D) a negative externality exists.
When an insurance company pays 20% of the bill for health care services, this
A. reduces demand and makes demand less elastic. B. reduces supply. C. reduces demand. D. makes demand less elastic.