Figure 14.2 represents the market for used cameras. Suppose buyers are willing to pay $125 for a plum (high-quality) used camera and $25 for a lemon (low-quality) used camera. If buyers believe that 50% of used cameras in the market are lemons (low quality), what fraction of used cameras sold will actually be lemons (low quality)?
A. 10/25
B. 10/35
C. 25/35
D. All of the cameras sold will be lemons.
Answer: C
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Which of the following is a consequence of the voting paradox?
A) The collective preferences of voters are not transitive and voting outcomes are inconsistent. B) Individuals and firms who benefit from government actions engage in rent seeking. C) A majority of voters elect a candidate that does not represent the preferences of the voter who is in the political middle. D) Politicians support small groups of individuals and firms that benefit from special interest legislation, rather than a much larger group of voters who pay the cost for this legislation.
State banking authorities have sole jurisdiction over state banks
A) without FDIC insurance. B) that are not members of the Federal Reserve System. C) operating as bank holding companies. D) chartered in the 21st century.
When the firm is able to perfectly price discriminate, each unit is sold at its: a. peak load price
b. reservation price. c. cost price. d. market price.
If inflation had long been 4% and was therefore expected to continue, then it unexpectedly increased to 7% inflation: a. the real interest rate on loans issued just before the change occurred would decrease by three percentage points. b. the real interest rate on loans issued just before the change occurred would increase by three percentage points. c. the real interest rate on loans issued
just before the change occurred would not change. d. none of the above.