The lemons model predicts that:
A. if there are low-quality goods in the market, there will be fewer or no high-quality items.
B. if there are high-quality goods in the market, there will be fewer or no low-quality items.
C. the more low-quality goods there are in the market, the more high-quality goods there will be in the market.
D. if buyers are pessimistic about the percentage of low-quality goods on the market, sellers of low-quality goods will be able to charge higher prices than if buyers had neutral beliefs.
Answer: A
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According to William Niskanen's model of bureaucracy, Congress tends to approve a bureau's budget at a level where
a. the marginal value of the last unit of the bureau's output is greater than the marginal cost. b. the marginal cost of the last unit of the bureau's output is greater than the marginal value. c. the marginal value of the last unit of the bureau's output equals the marginal cost. d. the marginal cost of the last unit of the bureau's output is zero.
If you are willing to sell your car business for $500,00 . and someone offers you $420,00 . for it, this transaction will generate:
a. There is no surplus created b. $80,00 . worth of seller surplus and unknown amount of buyer surplus c. $40,00 . worth of buyer surplus and $40,00 . of seller surplus d. $80,00 . worth of buyer surplus and unknown amount of seller surplus
A balanced budget is present when:
a. the economy is at full employment. b. the actual level of aggregate spending equals the planned level of spending. c. public sector spending equals private sector spending. d. government revenues equal government expenditures.
Higher standards of living are the result of
a. an increase in the general level of prices. b. trade restrictions that favor domestic industries over foreign competition. c. an increase in the availability of goods and services that people value. d. government subsidies that expand employment.