Contracting for Lawn Mowing Services An apartment owner advertises for lawn mowing services for a number of apartments he owns. He has some idea of the going price and so he advertises that he will pay $100 per month per apartment complex. So why is he disappointed that the winning contractor only provides minimal services?
He has fallen victim to adverse selection. The scope of services offered by lawn service companies differs from the most basic to elaborate manicuring. Because he stated a price he is willing to pay, the only offers he receives are the lower cost, more basic services.
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Which statement is correct?
A. In the short run the pure monopolist will maximize total profits by producing at that level of output where the difference between price and average total cost is greatest B. In the short run the pure monopolist will charge the highest price it can get for its product C. Because of its ability to set its own price, the pure monopolist can increase price and increase its volume of sales simultaneously D. Pure monopolists do not always realize positive profits, sometimes they suffer losses
The income elasticity of demand for jewelry is 2. Other things equal, a 10 percent increase in consumer income will:
A. decrease the quantity of jewelry purchased by 20 percent. B. increase the quantity of jewelry purchased by 20 percent. C. decrease the quantity of jewelry purchased by 10 percent. D. increase the quantity of jewelry purchased by 10 percent.