Some racing horse breeders keep a few of their foals and sell the others. Generally, they put the poorest quality foals up for sale early in the season. Buyers have limited information about the foals up for sale, but they know that the first foals from some breeders will not be good racers. Other breeders sell all their foals. Since buyers cannot know which breeders are keeping back their good foals, they are suspicious of all foals offered for sale early in the season, lowering the sale prices. Breeders who sell all their foals are therefore forced to hold back their better foals until later in the season, to get true market prices for them. The market for foals is therefore subject to the
A. adverse selection problem.
B. moral hazard problem.
C. free-rider effect.
D. none of the above
Answer: A
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Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 
A. Rising; A B. Falling; A; C C. Falling; B: C D. Rising; A; C
In a graph of a firm's short-run total costs and total revenue, the total cost and the total revenue curves, respectively, will intersect the vertical axis
A) above the origin, above the origin. B) above the origin, at the origin. C) at the origin, at the origin. D) below the origin, below the origin.
Which of the following statements are true regarding profit maximizing firms? a. They will attempt to maximize the difference between total revenues and total costs. b. They will use more of a resource as long as the MRC is greater than the MRP
c. They will only produce where MRP is positive and MRC is negative. d. none of the above.
Suppose the domestic supply (QSU.S.) and demand (QDU.S) for bicycles in the United States is represented by the following set of equations:QSU.S. = 2PQDU.S. = 200 - 2P.Demand (QD) and supply (QS) in the rest of the world is represented by the equations:QS = PQD =160 - P.Quantities are measured in thousands and price, in U.S. dollars.After the opening of free trade with the rest of the world, if the world price of bicycles settles at $60, the United States will
A. import 60,000 bicycles. B. export 60,000 bicycles. C. export 40,000 bicycles. D. import 40,000 bicycles.