Signals may prevent adverse selection if
A) sending a false signal is cheap for the agent.
B) sending a false signal is costly for the agent.
C) agents as rational.
D) signals are as good as cheap talk.
B
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A single-price monopoly can sell 10 units of its product at a price of $45 each but to sell 11 units, the monopoly must cut the price to $44. What is the marginal revenue of the extra unit sold?
A) $484 B) $450 C) $44 D) $34 E) -$1
The life cycle hypothesis explains the long run constancy of the savings rate and short run variability of savings rate provided
A) the proportions of working and retired people are constant in each historical era. B) the saving behavior of each age group does not change from generation to generation. C) A and B are both required to explain the apparent contradiction. D) Friedman's PIH is in error.