A seller's verbal assurance that a used car is a plum (high-quality car):
A. is not effective at reducing the problems associated with asymmetric information.
B. is an effective way for sellers to prove that the good they are selling is of high quality.
C. is a more efficient way to prove high quality than a money-back guarantee because it does not cost the seller any money to make the assurance.
D. provides the same protection against adverse selection than does a repair guarantee.
Answer: A
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In the labor negotiation game:
a. The payoffs are always higher if you accommodate b. The payoffs are always higher if your opponent accommodates c. The payoffs from accommodating are only higher if your opponent bargains hard d. The payoffs from accommodating are only higher if your opponent accommodates
Use the figure below to answer the following question.
What is the amount of producer surplus after the government imposes the excise tax on the market?
A. $32 B. $7 C. $9 D. $40