Stellar Electronics sells all of the 20,000 GPS devices it produced for a price of $50 each. Every consumer who wants a GPS device from Stellar is able to buy one. This example shows ______.
a. market surplus
b. individual equilibrium
c. market equilibrium
d. individual surplus
c. market equilibrium
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If the expected value of the U.S. dollar rises, one would expect ________
A) a decrease in the demand for dollars B) an increase in the demand for the dollar C) an increase in U.S. income D) an increase in federal income tax rates
Which of the following is not advantage of a negative income tax?
a. A negative income tax is simple to administer. b. A negative income tax is equivalent to a cash transfer. c. A negative income tax retains the paternalistic nature of in-kind transfers. d. A negative income tax could replace many transfer programs.
Suppose Kate's Great Crete (KGC) has annual variable costs of VC = 30Q + 0.0025Q2 and marginal costs of MC = 30 + 0.005Q, where Q is the number of cubic yards of concrete it produces per year. In addition, it has an avoidable fixed cost of $50,000 per year. KGC's demand function is Qd = 20,000 - 400P. What is KGC's average cost function?
A. AC = (50,000/Q) + 50 + 0.005Q B. AC = (20,000/Q) + 30 + 0.005Q C. AC = (50,000/Q) + 30 + 0.0025Q D. AC = 50,000 + 30Q + 0.0025Q2
Suppose that there are two types of cars, good and bad. The qualities of cars are not observable but are known to the sellers. Risk-neutral buyers and sellers have their own valuation of these two types of cars as follows: Types of CarsBuyer's ValuationSeller's ValuationGood (50% probability)5,0004,500Bad (50% probability)3,0002,500When a buyer does not observe the quality, what is the highest price she will offer for a used car if she ignores adverse selection?
A. $4,500 B. $4,000 C. $2,500 D. $3,000