11 May WHICH OF THE MARKETS IN TABLE 14.1 ARE IN EQUILIBRIUM?
Which of the following is theleast
likely example of asymmetric information?
A)
an insurance company and a client who just obtained a driver license
B)
a seller of used cars and a prospective customer
C)
a seller of fresh fruit and a buyer
D)
a retailer of Music CDs and a buyer
12)
A mixed market is one in which
A)
consumers can be buyers and sellers and producers can be sellers and buyers.
B)
there are different qualities of a good being sold in the market and there is
imperfect information about the quality of each good.
C)
a seller of a good requires that the purchase of one good be tied to the
purchase of another.
D)
demand is positively sloped and supply is negatively sloped.
13)
Suppose buyers in the used car market are willing to pay $4,000 for a plum
(high-quality) used car and $2,000 for a lemon (low-quality) used car. If
buyers believe that 50% of the used cars on the market are lemons (low
quality), what would they be willing to pay for a used car?
A)
$2000
B)
$3000
C)
$3500
D)
$4000
14)
Suppose buyers in the used car market are willing to pay $8,000 for a plum
(high-quality) used car and $3,000 for a lemon (low-quality) used car. If
buyers believe that 20% of the used cars on the market are lemons (low
quality), what would they be willing to pay for a used car?
A)
$7,000
B)
$6,000
C)
$5,000
D)
$4,000
15)
Suppose buyers in the used car market are willing to pay $5,000 for a plum
(high-quality) used car and $2,500 for a lemon (low-quality) used car. If
buyers believe that 50% of the used cars on the market are lemons (low
quality), what would they be willing to pay for a used car?
A)
$2500
B)
$3000
C)
$3750
D)
$5000
16)
Suppose buyers in the used car market are willing to pay $6,000 for a plum
(high-quality) used car and $3,000 for a lemon (low-quality) used car. If
buyers believe that 75% of the used cars on the market are lemons (low
quality), what would they be willing to pay for a used car?
A)
$4,250
B)
$4,000
C)
$3,750
D)
$3,500
17)
In equilibrium in a mixed market
A)
the% of low quality goods on the market equals the buyers’ estimate of the% of
low quality goods on the market.
B)
the% of low quality goods on the market equals the sellers’ estimate of the% of
low quality goods on the market.
C)
50% of the goods on the market are low quality and 50% are high quality.
D)
all low quality goods have been driven out of the market.
18)
If buyers believe that the percentage of high quality goods on the market is
greater than the actual percentage of high quality goods on the market
A)
buyers will be willing to pay a price that is higher than the price they would
pay with perfect information.
B)
the most that buyers will be willing to pay is less than the price they would
pay with perfect information.
C)
sellers of low quality goods will be driven from the market.
D)
the market will be in a short run equilibrium.
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Table 9.1
19)
Table 9.1 represents 3 markets for used computers. Which of the markets in
Table 14.1 are in equilibrium?
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