The lemons problem is associated with ________ and results in a market for items with only ________ characteristics.
A) adverse selection; desirable
B) moral hazard; undesirable
C) adverse selection; undesirable
D) moral hazard; desirable
C) adverse selection; undesirable
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"Because the price of a diamond is much greater than the price of a gallon of water, the consumer surplus from diamonds is greater than the consumer surplus from water." Is the previous analysis CORRECT? Explain your answer
What will be an ideal response?
A publicly traded firm has 4 million shares of stock outstanding, with a current share price of $50. The value of its plant and equipment is $250 million. Its profit annually is $50 million. The average cost of capital is approximately
a) 5% b) 10% c) 15% d) 20% e) 25%
A decrease in the price level in an economy will _____
Fill in the blank(s) with the appropriate word(s).
If pilots and flight attendants agree to wage and benefit reductions in the wake of the financial difficulties in the airline industry, what impact would this have on the supply and demand in the market for airline service, assuming no other changes take
place in this market? What will be an ideal response?