Consumers know that some fraction x of all new cars produced and sold in the market are defective. The defective ones cannot be identified except by those who own them. Cars do not depreciate with use. Consumers are risk-neutral and value nondefective cars at $10,000 each. New cars sell for $8,000 and used ones for $2,000. (Note that since buyers are risk-neutral, the price of a new car reflects the expected value of purchasing a car that may or may not be defective.) What is the fraction x?

Samantha decides to withdraw $10,000 from her savings account and invest it all in the stock market. Her total economic costs

A) equal $10,000. B) are independent of the interest she enjoyed in her savings account. C) are affected by the interest she enjoyed in her savings account. D) are determined solely by the commission she is charged for the purchase of stock.

Suppose agricultural technology results in increased grain yield for U.S. farmers. The increased supply of grain will drive down grain prices. Because the demand for grain is price elastic, lower prices will result in lower total farm revenue

Indicate whether the statement is true or false