Owners of defective used cars have more information about the condition of their vehicles than potential buyers of those used cars. This is an example of:
A. the moral hazard problem.
B. a spillover cost.
C. a positive externality.
D. asymmetric information.
Answer: D
Economics
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The above figure shows the market for a particular good. If the market is controlled by a perfect-price-discriminating monopoly, compared to a perfectly competitive market, the change in producer surplus is
A) B + C. B) D + E. C) A + B + C. D) A + B + C + D + E.
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Why is the tax multiplier smaller than the government spending multiplier?
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