You are responsible for purchasing 20 used computers for your company. Red Brand computers cost $1,250 and Green Brand computers cost $1,800. Based on experience, you believe that 60% of Red Brand computers are lemons (low quality) while 20% of Green Brand computers are lemons (low quality). You are willing to pay $1,000 for a known lemon and $2,000 for a known plum. Which brand do you purchase?
A. Red Brand
B. Green Brand
C. You are indifferent between brands.
D. You don't buy either brand.
Answer: A
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A decrease in interest rates will
A) shift the investment function relating planned investment to the interest rate to the left. B) be a movement along the investment function relating planned investment to the interest rate. C) shift the investment function relating planned investment to the interest rate to the right. D) have no impact on the investment function relating planned investment to the interest rate.
Monopoly has two key features, which are ________
A) barriers to entry and no close substitutes B) franchises and barriers to entry C) barriers to entry and close substitutes D) close substitutes and no barriers to entry
The "housing bubble" discussed in the text book refers to:
A. housing prices rising much more quickly than the rest of prices in the economy. B. housing prices within a certain area of the U.S. rising disproportionately with the rest of houses in the economy. C. an unexplained increase in the demand for houses which caused the prices of houses to rise. D. a supply shock to the housing market, which caused housing prices to increase.
When there is inflation, the number of dollars needed to buy a representative basket of goods
a. increases, and so the value of money rises. b. increases, and so the value of money falls. c. decreases, and so the value of money rises. d. decreases, and so the value of money falls