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Homework answers / question archive / If a market has adverse selection problems, what do we expect to happen in that market? Demand will be higher than if consumers had full information
If a market has adverse selection problems, what do we expect to happen in that market? Demand will be higher than if consumers had full information. Demand will be lower than if consumers had full information Supply would be greater than if consumers had full information. None of the above. Question 5 (2 points) Saved The free rider problem applies to Market power. Public goods. Positive externalities. Negative externalities.
Question 7 (2 points) Which of the following is NOT one of the government's options in dealing with a firm with market power? Split up the company. Prevent mergers to keep firms from growing. Customers boycotting the seller. Doing nothing. Question 8 (2 points) Saved Which of the following is an example of a public good? Movie Theater Tacos Natural history museum None of the above. Question 9 (2 points) Z-Mart begins adding a security tag to good X. This massively reduces instances of shoplifting of good X. Is good X a public good? Yes, it is not excludable and non-rival in consumption. No, it is excludable. No, it is sold by a private company. It is impossible to determine whether good X is a public good.
Question 11 (2 points) A store is giving out free samples (limit 2). There is a line waiting for the samples. What can we say about this sample? It is excludable. It is rival in consumption. Olt is both rival in consumption and excludable. It is neither. Question 12 (2 points) A company website offers a 30 day return policy on the products it sells. This is an attempt to solve information asymmetry via Signaling. Screening Government regulation.
The answers are as follows:-
4.A)Demand would be higher if the consumers had full information
If consumers have full information about the products that they are purchasing,they will have greater confidence and hence demand will be higher.
7.C) Customers boycotting the seller
Custsomers boycotting the firm is a choice for the consumers and the government can't interfere in that.The rest of the options are available.
9.B)No,it is excludable
The security tag makes the good excludable since non payers can be excluded.
11.C)It is rival in consumption
Once a free sample is consumed,someone else cannot consume it.
12. A) Signalling
The return guarantee is a signal of quality to the consumer.
