Figure 9.1 represents the market for used bikes. Suppose buyers are willing to pay $200 for a plum (high-quality) used bike and $50 for a lemon (low-quality) used bike. If buyers believe that 50% of used bikes in the market are lemons (low quality), what fraction of used bikes sold will actually be lemons (low quality)?
A. 8/30
B. 22/30
C. 8/22
D. 30/30
Answer: B
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In the long run, all firms in a monopolistically competitive industry make
A) negative accounting profit. B) zero accounting profit. C) an economic profit. D) zero economic profit.
_____ and _____ are examples of complementary products
a. Coke; Pepsi b. Coffee; tea c. Hot dogs; hot dog buns d. Pens; pencils
In the United States, incomes have historically grown
a. about 0.5 percent per year. b. about 2 percent per year. c. about 4 percent per year. d. about 6 percent per year.
The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1,050), personal consumption expenditures ($4,800), imports ($370), exports ($240), and gross private domestic investment ($1,130). Personal consumption expenditures are approximately what percentage of this economy?
A. 60 percent B. 75 percent C. 70 percent D. 65 percent