When a person wants to buy a used car, asymmetric information may land her with a “lemon” because:
a. neither she nor the dealer can know everything about the car.
b. a used car is in a lower-risk category for insurance purposes.
c. a used car that has been in an undisclosed accident could have alignment problems.
d. the car dealer knows more about the car than she does.
d. the car dealer knows more about the car than she does.
Many buyers face a situation of asymmetric information, where one party knows much more than the other.
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Collective bargaining between unions and employers often lead:
A) to wages that are lower than what workers would have received at equilibrium. B) to reduction in the unemployment rate. C) to wages that are higher than what workers would have received at equilibrium. D) to wages equal to what workers would have received at equilibrium.
When OPEC nearly tripled the price of oil in late 1973,
A) the U.S. price level fell because production became too expensive. B) U.S. real GDP increased as profits by oil producers increased. C) U.S. real GDP did not change although the price level rose. D) both U.S. real GDP and the price level increased. E) the U.S. price level rose and real GDP decreased.
Refer to Table 2-10. Which of the following statements is true?
A) Barney has a comparative advantage in making unicycles and Fred in making pogo sticks. B) Barney has a comparative advantage in making pogo sticks and Fred in making unicycles. C) Barney has a comparative advantage in making both products. D) Fred has a comparative advantage in making both products.
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What will be an ideal response?