You are responsible for purchasing 25 used cars for your company. Star Brand cars costs $7,500 and Diamond Brand cars cost $6,000. Based on experience, you believe that 20% of Star Brand cars are lemons (low quality) while 40% of Diamond Brand cars are lemons (low quality). You are willing to pay $5,000 for a known lemon and $12,000 for a known plum. Which brand do you purchase?
A. Star
B. Diamond
C. You are indifferent between brands.
D. You don't buy either brand.
Answer: B
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Why do convex indifference curve have a negative slope?
A) because to keep utility constant, a consumer must get more of one good if she is to give up some of the other B) because scarcity implies that it is not possible to consume more of one good without giving up some of the other C) because consumers take market prices as given D) because consumers face a budget constraint
The resource based view locates the source of advantage at the
a. Individual firm level b. Industry level c. Both a and b d. None of the above
The adverse selection problem is most likely in which of the following occupations?
a. waiter/waitress b. barber c. college professor d. supermarket cashier e. tightrope walker
Workers compete against workers who have:
A. the exact same type of human capital. B. similar human capital. C. totally different human capital. D. all levels of human capital.