Which of the following statements is true for both Microsoft and a locally owned restaurant?
A. Both confront perfectly elastic demand for their products.
B. Both are perfect competitors.
C. Both seek to maximize profits.
D. Neither firm is able to influence the price of their products.
Answer: C
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If the value that consumers place on the 100th unit of chocolate is $5, and the value of the resources used to produce that 100th unit is $2, to achieve an efficient allocation of resources
a. a $3 externality associated with chocolate production must be generated b. a $3 externality associated with chocolate production must be eliminated c. less resources should be allocated to chocolate production d. more chocolate should be produced e. less chocolate should be produced
Reading a Consumer Reports review of a vacuum cleaner before buying is the same way of dealing with information asymmetry as:
A. an insurance company offering different deductible-level plans. B. an employer requiring a drug test. C. a college charging a high tuition relative to other schools. D. a buyer choosing a used car from a brand dealership.