11) Which of the following is theleast likely example of asymmetric information?
A) an insurance company and a client who just obtained a driver license
B) a seller of used cars and a prospective customer
C) a seller of fresh fruit and a buyer
D) a retailer of Music CDs and a buyer
12) A mixed market is one in which
A) consumers can be buyers and sellers and producers can be sellers and buyers.
B) there are different qualities of a good being sold in the market and there is imperfect information about the quality of each good.
C) a seller of a good requires that the purchase of one good be tied to the purchase of another.
D) demand is positively sloped and supply is negatively sloped.
13) Suppose buyers in the used car market are willing to pay $4,000 for a plum (high-quality) used car and $2,000 for a lemon (low-quality) used car. If buyers believe that 50% of the used cars on the market are lemons (low quality), what would they be willing to pay for a used car?
A) $2000
B) $3000
C) $3500
D) $4000
14) Suppose buyers in the used car market are willing to pay $8,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. If buyers believe that 20% of the used cars on the market are lemons (low quality), what would they be willing to pay for a used car?
A) $7,000
B) $6,000
C) $5,000
D) $4,000
15) Suppose buyers in the used car market are willing to pay $5,000 for a plum (high-quality) used car and $2,500 for a lemon (low-quality) used car. If buyers believe that 50% of the used cars on the market are lemons (low quality), what would they be willing to pay for a used car?
A) $2500
B) $3000
C) $3750
D) $5000
16) Suppose buyers in the used car market are willing to pay $6,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. If buyers believe that 75% of the used cars on the market are lemons (low quality), what would they be willing to pay for a used car?
A) $4,250
B) $4,000
C) $3,750
D) $3,500
17) In equilibrium in a mixed market
A) the% of low quality goods on the market equals the buyers’ estimate of the% of low quality goods on the market.
B) the% of low quality goods on the market equals the sellers’ estimate of the% of low quality goods on the market.
C) 50% of the goods on the market are low quality and 50% are high quality.
D) all low quality goods have been driven out of the market.
18) If buyers believe that the percentage of high quality goods on the market is greater than the actual percentage of high quality goods on the market
A) buyers will be willing to pay a price that is higher than the price they would pay with perfect information.
B) the most that buyers will be willing to pay is less than the price they would pay with perfect information.
C) sellers of low quality goods will be driven from the market.
D) the market will be in a short run equilibrium.
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Table 9.1
19) Table 9.1 represents 3 markets for used computers. Which of the markets in Table 14.1 are in equilibrium?
A) 1 only
B) 2 only
C) 3 only
D) 2 and 3
20) Table 9.1 represents 3 markets for used computers. Which of the markets in Table 14.1 in equilibrium?
A) 1 only
B) 2 only
C) 3 only
D) 1 and 3
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A monopolist operates at the minimum point of her ATC curve A) only in the short run. B) only in the long run. C) in both the short run and the long run. D) in neither the short run nor the long run. 10. Which of the following is characteristic of a monopoly? A) The absence of political power B) Close substitute products C) The ability to make an economic profit in the long run D) Operating at peak efficiency. (I will send the image) 11. This firm will charge a price of A). $8. B) $9.65. C) $10. D) $12. E) $16 12. Statement I. Only natural monopolies are legal in the United States. Statement II. Large firms generally operate at peak efficiency. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 13. The nation's largest bank has assets over A) $2.5 billion. B) $25 billion. C) $250 billion. D) $800 billion. E) $1.8 trillion. 14. Which statement is true? 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When price is $8 A) quantity demanded is greater than quantity supplied and, therefore, price must fall to get to equilibrium price. B) quantity demanded is greater than quantity supplied and, therefore, price must rise to get to equilibrium price. C) quantity supplied is greater than quantity demanded and, therefore, price must fall to get to equilibrium price. D) quantity supplied is greater than quantity demanded and, therefore, price must rise to get to equilibrium price. 35. Usury is considered the charging of A) higher interest rates than people are willing to pay. B) lower interest rates than people are willing to pay C) unconscionably high interest rates. D) extremely low rates of interest. 36. The present value of a dollar rises as A) the interest rate declines and the number of years you wait for your money declines. B) the interest rate rises and the number of years you wait for your money rises. C) the interest rate declines and the number of years you wait for your money rises. D) the interest rate rises and the number of years you wait for your money declines. 37. In economics we say the amount of land is A) fixed. B) variable. C) both fixed and variable. D) neither fixed nor variable. 38. Which is not determined by supply and demand? A) The wage rate B) The interest rate C) Rent D) Profits 39. Which of the following is false? A) The supply of land is fixed. B) When the demand for a plot of land rises, its supply will rise. C) Land is most efficiently used in cities. D) The rent on a particular piece of land is based on the MRP schedule of the highest bidder. 40. If you knew that interest rates would be rising, then you would predict that the present value of $1 received 5 years from now A) would be higher. B) would be about the same. C) would be lower. D) could be higher or lower. 41. Changes in rent on a plot of land are chiefly due to A) changes in demand. B) changes in supply. C) changes in both demand and supply. D) changes in neither supply nor demand. (I will send the image) 42. The horizontal dotted line is A) a price ceiling. B) a price floor. C) either a price ceiling or a price floor. D) neither a price ceiling nor a price floor. 43. These lenders avoid using the term "interest," but their borrowers still do pay a charge for borrowing money. This would be considered ___________ lending. A) Islamic B) payday C) fringe D) sub-prime 44. __________ sees the entrepreneur as an exploiter of labor. A) Joseph Schumpeter B) Frank Knight C) Henry George D) Karl Marx 45. A more equal distribution of income A) might hurt the incentive to work .B) would not hurt the incentive to work C) would be opposed by nearly all Americans D) would hurt the poor. 46. Between 1994 and 2005 our welfare rolls A) declined substantially every year. B) declined slightly every year .C) declined most years. D) stayed about the same. E) rose most years 47.Who expressed this view? "Unlike the present period, (black) inner-city communities prior to 1960 exhibited the features of social organization—including a sense of community, positive neighborhood identification, and explicit norms and sanctions against aberrant behavior." A) Charles Murray B) William Julius Wilson C) Mickey Kaus D) Lisabeth Schorr E) Celia Dugger 48. According to Darity and Myers A) black men are becoming increasingly marginal to our economy B) the basic cause of poverty is welfare dependency C) the best solution to poverty is the negative income tax D) as our economy continues to expand, black poverty will decline (I will send the image) 49. The percentage share of income of the bottom quintile on curve X is A) 0. B) 5. C) 10. D) 15. E) 20. 50. The percentage of people living in poverty in 2006 in the U.S. was _______. A) 6 B) 11.7 C) 12.3 D) 15.2 51. Child poverty is A) much more of a problem in France, Germany, and Japan than it is in the U.S. B) less of a problem in the United States than in Canada, Britain, or Italy. C) more of a problem in Sweden, Denmark, and Ireland than it is in the U.S. D) much more of a problem in the U.S. than in virtually all other industrialized countries. 52. Statement I: Social Security payments help mostly the poor. Statement II: Poverty may be defined as a relative concept and as an absolute concept. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 53. Compared to their levels in 1999, the poverty line has ______ and the minimum hourly wage has ________. A) gone up; gone up B) stayed the same; stayed the same C) gone up; stayed the same D) stayed the same; gone up 54. In which year was the poverty rate the lowest? A) 1960 B) 1973 C) 1984 D) 1993 E) 2006 55. Which statement is true? A) Most economists support rent control laws. B) Usury laws and rent control are price ceilings. C) Usury laws have never had any effect because they are set well above interest rates. D) None of the choices. (I will send the image) 56. If price were set by the government at $3, there would be a price _____________, that would cause a ___________ of _______ units. A) floor, surplus, 12 B) floor, shortage, 12 C) ceiling, surplus, 14 D) ceiling, shortage, 14 57. Sue Ann Buchanan, can make $800,000 on the pro tennis tour, but would be willing to do it for $200,000. Her economic rent is A) $200,000. B) $600,000. C) $800,000. D) $1,000,000. 58. Despite their fantastic employment gains, African American men earn ____% of what white men earn. A) 65 B) 55 C) 60 D) 76 59. Since 1996, productivity growth has ________ and real wages have ______. A) risen; risen B) fallen; fallen C) risen; fallen D) fallen; risen. 60. Which statement is false? A) The minimum wage has NOT kept up with the rate of inflation .B) The average real hourly earnings fell steadily from 1973 to 1993. C) Workers with some high school education make about the same average annual earnings as those with high school diplomas. D) It is harder for a middle class student to get a college degree because since 1979, the cost of going to college has gone up twice as fast as the rate of inflation.
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- Imperfect Competition
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