Which of the following relationships involves asymmetric information?
a. A recruiter for a college football team evaluates the performance of a high-school player.
b. A loan applicant knows more about the likelihood her business will be successful than the loan officer.
c. Someone considering buying running shoes looks at a number of online reviews by buyers.
d. All of the above are correct.
Ans: b. A loan applicant knows more about the likelihood her business will be successful than the loan officer.
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All of the following are considered to be problems associated with the use of concentration ratios to measure market power except:
A) the market definitions used in their construction may be arbitrary. B) two different markets with the same concentration ratio may have very different distributions of market share among firms used to calculate the concentration ratio. C) consideration of exports and imports generally causes concentration ratios to be overstated. D) concentration ratios are often based on national statistics and may not reflect substantial concentration in a market at a more localized level.
The Clayton Act of 1914
A. outlawed all mergers. B. abolished the Sherman Act of 1890. C. outlawed specific business practices that discouraged competition. D. reduced the federal government's antitrust authority.
Firms will invest in new equipment whenever:
A. the expected cost of the equipment is less than the expected benefit. B. the expected cost of the equipment exceeds the expected benefit. C. public saving is greater than private saving. D. the expected cost of the equipment is greater than the value of the marginal product of the equipment.
Which of the following define ceteris paribus? (check all that apply)
a. "Additional" factors, other than those under consideration, are given equal consideration. b. Other-things-equal assumption c. "Additional" factors, other than those under consideration, play a significant role in analysis. d. Factors other than those being considered in a particular analysis do not change. b. Other-things-equal assumption