Figure 9.5 represents the market for used cars. Suppose buyers are willing to pay $5,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. If buyers believe that 80% of used cars in the market are lemons (low quality), how many plums will be supplied in the market?
A. 30
B. 40
C. 70
D. 120
Answer: B
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The price elasticity of demand shows
A) the relationship between market price and household income. B) the proportionate amount by which the quantity demanded changes in response to a proportionate change in price. C) the quantity demanded at a given price. D) the proportionate amount by which the price changes in response to a proportionate change in quantity demanded.
Gross investment minus depreciation is equal to:
A. gross domestic product. B. net investment. C. personal investment. D. nominal investment.
Suppose a restaurant is trying to determine how much to charge for a bowl of chili, and decides to run an experiment to see how much its customers are willing to pay by allowing them to set their own price for this menu item
a. Is charging a customer the price he or she is willing to pay for the bowl of chili an example of price discrimination? Briefly explain. b. What is it called when a firm knows every consumer's willingness to pay, and can charge every consumer a different price? What happens to consumer surplus in this situation?
Factors of production is another name for
a. the goods produced in a production possibilities table b. the goods not produced in a production possibilities table c. the goods produced in international trade d. resources e. money