Some states have laws that require that used car dealers give buyers a 30-day period during which they can return cars that are discovered to be lemons (low-quality). Who do laws like this help? Who do they hurt?
What will be an ideal response?
Buyers are helped because if they find that they have overpaid for a car they can return it. Sellers of plums (high quality) are also helped because consumers will feel confident in buying their cars at high prices. These sellers need not worry about the cars being returned because they are plums (high quality). The only people hurt are the sellers of lemons (low quality) who cannot cajole someone into buying a lemon and then "stick" them with it.
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Sheila's Sports Shop is a very popular sporting goods store, which has a yearly revenue of $600,000. Sheila runs the business herself
Her alternative employment options are to be a college swimming coach for $50,000 per year or a construction worker for $40,000 per year. Sheila spends $230,000 purchasing goods for resale to her customers. She also has four employees, who each earn $25,000 per year. Sheila owns the building that her Sports Shop is housed in and she could have rented it out for $20,000 per year. Sheila's costs for the resources that she supplies to the business equal A) $70,000 per year. B) $90,000 per year. C) $0 per year. D) $330,000 per year.
The limitation that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as
A) maximizing behavior. B) economizing behavior. C) the budget constraint. D) the price constraint.