All Matches

Solution Library

Expert Answer

Textbooks

Search Textbook questions, tutors and Books

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Tutors
Study Help
Hire a Tutor
AI Study Help New

Search
Sign In
Register

study help
business
foundations of microeconomics

Questions and Answers of Foundations Of Microeconomics

Now think about the sellers of used cars, who know the quality of their cars. There is nothing special about this supply: Sellers know their marginal cost, so they know the quantity they are willing
Watch The Demand for a Used Car of Unknown Quality Sellers’ Decisions and Supply
(2) If all Greg’s friends bought lemons, Greg might expect to buy a lemon too and be willing to pay $10,000—his marginal benefit from a lemon.The demand curve for lemons is D .The demand curve
(1) If all Greg’s friends bought good used cars, Greg might expect to buy a good one too and be willing to pay $20,000—his marginal benefit from a good car. The demand curve for good cars is D .
Figure 12.1 illustrates the demand for used cars. If previous buyers say that they’ve never seen a lemon, buyers expect no lemons and the demand curve for used cars is D . If previous buyers say
Figure 12.1 The Demand for a Used Car of Unknown Quality
Other buyers are making decisions like Greg’s and figuring out what they are willing to pay for a car of unknown quality. Some buyers are willing to pay more than Greg and some less. At higher
But if all Greg’s friends bought lemons, he will be thinking that this car is most likely a lemon too. In this case, he is willing to pay only $10,000, so$15,990 is much more than he would be
Will Greg pay $15,990? The answer depends on the odds of avoiding a lemon and how Greg regards taking risks. Although he doesn’t know the quality of the car, he knows what all his friends have told
Is this car a good one with a marginal benefit of $20,000 and a consumer surplus of $4,110? Or is it a lemon with a marginal benefit of $10,000 and a consumer “deficit” of $5,990? Will Greg buy
Now think about Greg’s dilemma. He has found a car priced at $15,990(in the photo). He likes the look of the car, but is it a good one or a lemon?• If the car is a good one, he gets a marginal
Greg wants to buy a used car and he would like to avoid buying a lemon.He knows that for him, the value of a good car—his marginal benefit—is$20,000. But Greg has a low income, some spare time,
Even though the buyers of used cars don’t know whether they are buying a good car or a lemon, the law of demand applies. The lower the price of a car, the greater is the quantity of cars demanded.
Buyers’ Decisions and Demand
information that is available only to the current owner. The buyer can’t tell whether the car for sale is a lemon until after buying it, driving it for a few weeks, and learning as much about it as
To explain the lemons problem as clearly as possible, we’ll assume that there are only two kinds of cars: defective cars—lemons—and cars without defects, which we’ll call good cars. Whether a
To see how the used-car market overcomes the lemons problem, we’ll first look at a market that does have a lemons problem.
George Akerlof of the University of California, Berkeley, and 2001 Nobel Laureate, was the first person to pose the lemons problem and the challenge that it presents for markets to allocate resources
When a person buys a used car, it might turn out to be a lemon. If the car is a lemon, it is worth less to the buyer than if it has no defects. Does the used-car market have different prices
A Market for Used Cars with a Lemons Problem
These are the questions we’ll now answer.
What determines the equilibrium price and quantity? Is the market efficient or inefficient?
One example of these markets is the market for used cars. In this market, each seller has private information about the quality of the vehicle offered for sale. When you buy a used car, you hope it
In some markets, either the buyer or the seller has some relevant information to a transaction—private information —that the other lacks.
In all the markets that you’ve studied so far, buyers and sellers are well informed about the features and the value of the item being traded.Buyers know the benefits they get and sellers know the
Describe the asymmetric information problems in the insurance market and explain how they are solved.12.2
Describe the lemons problem and explain how the used-car market solves it.12.1
How do you avoid buying a lemon?
Private Information and Healthcare Markets
D. marginal social cost of fishing Chapter 12
C. marginal external cost of fishing
B. marginal private cost of fishing
A. marginal benefit consumers receive from the fish caught
D. individual transferable quotas that trade at marginal external cost 8. When ITQs are assigned, the market price of an ITQ equals the.
C. assigning property rights to convert the common resource to private use
B. individual transferable quotas that total the efficient quantity
A. a production quota equal to the marginal external cost
7. All the following can achieve an efficient use of a common resource except .
D. marginal social benefit equals marginal private cost plus marginal external cost
C. marginal social benefit equals marginal social cost
B. marginal social benefit equals the fishers’marginal private cost
A. marginal social cost equals marginal private cost plus marginal external cost
6. Overfishing occurs if, at the quantity caught, .
. the rate of use of the resource equals the social benefit from its use
C. the rate of renewal of the resource equals its rate of use
B. private benefits equal private costs
A. private benefits and public benefits are equal
5. A renewable common resource is used sustainably if .
C. efficient private companies
B. highly trained bureaucrats
A. an election contest between two parties that want different quantities
4. The efficient quantity of a public good is most likely to be delivered by .
D. the quantity demanded by all the people at a given marginal social cost
C. the amount that all the people are willing to pay at a given quantity for one more unit
A. the quantity demanded by all the people at a given price B. the amount that all the people are willing to pay for a given quantity
3. The marginal social benefit from a public good is .
D. rival and excludable
C. rival and nonexcludable
B. nonrival and excludable
A. nonrival and nonexcludable
2. A free-rider problem arises if a good is .
D. nonexcludable; common resource
C. excludable; private
B. excludable; public
A. rival; private
1. A good is if it is possible to prevent someone from enjoying its benefits and such a good might be a good.
Explain how the Pacific islands’ action influences the efficiency of the use of tuna resources and illustrate your answer with a graph of the tuna market.Multiple Choice Quiz
9. The Great Pacific Tuna Cartel Eight small Pacific islands with control of 5.5 million square miles of prime tuna fishing waters, have tripled the access fee for U.S.tuna fishers from $21 million
8. Waukesha deserves a shot at Great Lakes water supply Source: www.startribune.com, December 11, 2015 Source: The Wall Street Journal, March 20, 2013 The city of Waukesha, Wis., has applied to
A natural spring runs under land owned by ten people. Each person has the right to sink a well and can take water from the spring at a constant marginal cost of $5 a gallon. Table 2 sets out the
4. If hikers and others were required to pay a fee to use the Appalachian Trail, would the use of this common resource be more efficient? Would it be even more efficient if the most
Table 1 Quantity (square miles sprayed per day)Marginal social cost Marginal social benefit(dollars per day)0.5 0 600 1.0 100 500 1.5 200 400 2.0 300 300 2.5 400 200 3.0 500 100
d. What information would be needed to determine the efficient number of bridges to repair each year? 
c. Why might it be efficient to charge drivers a toll every time they use a bridge?
b. Why might a bridge be provided by government rather than privately?
1.a. What type of good is a highway bridge?
Instructor Assignable Problems and Applications Use Table 1 , which provides data about a dandelion control program, to work Problems 2 and 3 .MyEconLab Homework, Quiz, or Test if assigned by
Are the oil and gas reserves public goods, private goods, or common resources? When an oil company receives a permit to develop a particular oil reserve, is that oil reserve a public good or a
9. U.S. issues Arctic drilling permit to Royal Dutch Shell The U.S. government has given Royal Dutch Shell permission to drill for oil and natural gas in the Arctic Ocean. Environmentalists say it is
5. If voters are well informed about the costs and benefits of the waste disposal system, what capacity will voters choose? If voters are rationally ignorant, will bureaucrats install the efficient
Use Figure 2 , which shows the market for North Atlantic tuna, to work Problems 6 to 8 .
Use Figure 1 to work Problems 4 and 5 . It shows the marginal social benefit and marginal social cost of a waste disposal system in a city of 1 million people.  Figure 1
3. Table 1 sets out total benefit from a public good for Wendy, Sara, and Tom, who are the only people in the society. If the government provided 3 units of the public good, calculate the marginal
Individual transferable quota (ITQ)Nonexcludable Nonrival Private good Public good Rational ignorance Rival Tragedy of the commonsChapter Checkpoint
MyEconLab Key Terms Quiz Benefit-cost analysis Common resource Excludable Free rider
Explain the tragedy of the commons and review its possible solutions.11.3 Key Terms
A common resource might be used efficiently by creating a private property right, setting a quota, or issuing individual transferable quotas.
A common resource is used to the point at which the marginal private cost equals the marginal social benefit.The efficient use of a common resource is the point at which marginal social benefit
Common resources create the tragedy of the commons—no one has a private incentive to conserve the resource and use it at an efficient rate.
Obstacles to efficient political outcomes are the difficulty of estimating social benefit, bureaucrats’ goals, and rational ignorance.When bureaucrats try to maximize their budgets, and if voters
Competition between political parties, each of which tries to appeal to the maximum number of voters, can lead to the efficient scale of provision of a public good and to both parties proposing the
The efficient level of provision of a public good is that at which marginal social benefit equals marginal social cost.
A public good creates a free-rider problem—no one has a private incentive to pay her or his share of the cost of providing a public good.
A common resource is a resource that is rival but nonexcludable.
A public good is a good or service that is nonrival and nonexcludable.
A private good is a good or service that is rival and excludable.
Watch Solutions Video: The Tragedy of The Commons
4. The market price of an ITQ would be $6 a gallon, which equals the marginal external cost at the efficient quantity of milk.
3. If the common pasture were converted to private land and fenced off, the quantity of milk produced would be the efficient quantity—60 gallons a day.
There is a tradeoff between hunting and killing animals for their meat, skin, tusks, or other parts and maintaining a healthy population of animals to be viewed by curious and interested tourists.

Showing 2200 - 2300 of 5048

First
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Last

Services

Sitemap
Fun
Definitions
Become Tutor
Study Help Categories
Recent Questions
Expert Questions

Company Info

Security
Copyrights
Privacy Policy
Terms & Conditions
SolutionInn Fee
Scholarship

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Campus Ambassador

Secure Payment

Download Our App

© 2024 SolutionInn. All Rights Reserved