If adverse selection exists in a market
A) the government steps in and shuts it down.
B) the market is considered a "grey market."
C) consumers may not participate in the market at all.
D) total surplus is maximized.
C
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In the figure above, if the firm is regulated using an average cost pricing rule, the consumer surplus created is equal to the area of
A) ABG. B) BEFG. C) BCFG. D) BCE. E) None of the above because there is no consumer surplus created.
Credit unions ________
A) acquire access to funds by accepting deposits then use these monies in lending to households and firms B) are a special type of mutual fund C) raise funds by selling commercial paper then lend these funds to consumers D) acquire access to monies through the payment of premiums by employees
To maximize expected profit, a perfectly competitive firm with a random marginal cost and known demand should produce at the level that sets ________ equal to ________.
A) marginal cost; marginal revenue B) expected marginal cost; marginal revenue C) expected marginal cost; expected marginal revenue D) marginal cost; expected marginal revenue
What would the Herfindahl-Hirschman Index equal for an industry consisting of six firms with market shares of 40 percent, 30 percent, 20 percent, 5 percent, 3 percent, and 2 percent?
A. 0.95 B. 2.934 C. 2,938 D. 10,000