Consider a used car market in which half the cars are good and half are bad (lemons). A rational buyer in this market should
A) save up and buy a new car.
B) offer to pay a price equal to the most she would pay for a good car.
C) offer to pay a price equal to the most she would pay for a lemon.
D) offer to pay a price somewhere between the price she would pay for a good car and the price she would pay for a lemon.
D
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Marginal utility theory predicts that as the price of coffee rises, the ________ a substitute for coffee ________ and the ________ coffee ________
A) supply of; increases; demand for; decreases B) supply of; decreases; supply of; increases C) demand for; increases; quantity demanded of; decreases D) demand for; decreases; demand for; increases
In 2015, the Educational Testing Service (ETS) charged $52.50 to take the Scholastic Aptitude Test (SAT) but $195 to take the Graduate Record Exam (GRE). One reason for this difference in price is
A) the GRE is a longer test with more questions. B) more people took the SAT than the GRE in 2015. C) an average, those who take the GRE have higher incomes than those who take the SAT. D) the ETS faces competition in the market for the SAT but no competition for the GRE.