Suppose you see a 2006 Scion xB Sport Wagon advertised in the local newspaper for $4,500. If you knew the car was reliable, you would be willing to pay $6,000 for it. If you knew the car was unreliable, you would only be willing to pay $2,500 for it
Under what circumstances should you buy the car at the asking price?
What will be an ideal response?
Because of the lemons problem you should buy the car only if the advertisement is placed by a car dealer with a good reputation or by an individual you know well enough to trust, if you can cheaply determine that it isn't a lemon (for example, by an inspection), or if you'll receive a solid warranty against defects.
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The figure above illustrates the current market for workers in Lima, Peru
a) Without any government intervention, what is the equilibrium wage rate and amount of employment? b) If the city government imposes a minimum wage of $3 an hour, what is the amount of employment? Does the minimum wage create any unemployment? Why or why not? c) If the city government imposes a minimum wage of $6 an hour, what is the amount of employment? Does the minimum wage create any unemployment? Why or why not?
Figure 3-23
Refer to . The movement from point A to point B on the graph shows
a.
a decrease in demand.
b.
an increase in demand.
c.
a decrease in quantity demanded.
d.
an increase in quantity demanded.