Signals solve the adverse selection problem
A) if the signal is an advertisement placed in the New York Times or other top-tier publication.
B) only if the signal is viewed as credible.
C) when the signal is expensive to produce.
D) if the signaling firm is known to be a profit-maximizer.
B
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In the late 1970s, savings and loans institutions were in financial trouble because they
A) had to pay low interest rates to attract depositors, but were earning low interest rates from past investments. B) had to pay low interest rates to attract depositors, but were earning high interest rates from past investments. C) had to pay high interest rates to attract depositors, but were earning high interest rates from past investments. D) had to pay high interest rates to attract depositors, but were earning low interest rates from past investments.
June makes holiday wreaths and sells them during the holiday season. The figure above shows her supply curve of wreaths per week. Use the midpoint method in this problem
a. Calculate the percentage change in quantity between points A and B. b. Calculate the percentage change in price between points A and B. c. Calculate the price elasticity of supply between points A and B.