Figure 14.2 represents the market for used cameras. Suppose buyers are willing to pay $125 for a plum (high-quality) used camera and $25 for a lemon (low-quality) used camera. If buyers believe that 50% of the used cameras in the market are lemons (low quality), how much will they pay for a used camera?
A. $25
B. $50
C. $75
D. $125
Answer: C
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In its most ideal form, a price system allows
A) firms to act in such a way that they eliminate scarcity. B) consumers to satisfy all their wants. C) resources to move from lower-valued uses to higher-valued uses through voluntary exchange. D) government policy makers to allocate resources to the uses which they consider to be in the best interests of society.
If today $1 exchanges for ¥135, and tomorrow $1 exchanges for ¥150,we say the euro has:
a. appreciated. b. depreciated. c. stagnated. d. become inverted.
The value of the marginal product of new capital increases when the:
A. the price of the good the firm produces decreases. B. real interest rate increases. C. price of new capital goods increases. D. productivity of new capital increases.
What is the slope of the line of aggregate expenditure plotted against output in equilibrium?
a. 0.0 b. 0.5 c. 1.0 d. 1.5