A person buys a used 1998 Honda Civic and finds that there is a problem in the drive train so that the whole set of axles must be replaced. However, the state has a law that protects the buyer from these kinds of discoveries for 30 days post purchase. These lemon laws attempt to correct the problem of:
A. adverse selection.
B. monopoly power.
C. arbitrage.
D. resource over-utilization.
Answer: A
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The number of firms producing computer memory chips decreases. As a result, the price of a memory chip ________ and the quantity of memory chips ________
A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases
One rationale for government involvement in health care markets is that government involvement is necessary to prevent the spread of contagious diseases, which can be a type of externality
Which of the following is not an example of a public health externality? a. The provision of vaccinations against communicable diseases. b. The provision of clean drinking water to prevent the spread of water-borne diseases. c. The elimination of pools of standing water to help prevent the spread of malaria. d. The provision of drugs to help control cholesterol, a primary factor in heart disease.
If the government wants to regulate a natural monopoly, it will force the firm to set price equal to
A) average cost. B) marginal cost. C) marginal revenue. D) None of the above.
"In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms demand and supply being used correctly?
A. In neither statement. B. In the second statement. C. In the first statement. D. In both statements.