Exam 18: Asymmetric Information

With asymmetric information among consumers and positive search costs c,all the other firms in the market are charging a monopoly price Pm.A firm may lower its price

-The market for used cars is shown in the above figure.Buyers cannot tell whether any given car is a lemon.For all cars offered for sale to be sold,the percent of all cars that are lemons is θ.What happens to θ if car buyers incur a $100 transaction cost when buying a used car?

If consumers have limited information about price and search costs exist,then

If there is zero search cost,then in the presence of asymmetric information,competitive firms will

Opportunism may occur when

Employers verify the facts of potential employees' resumes to avoid

-The market for used cars is shown in the above figure.Buyers cannot tell whether any given car is a lemon.Forty percent (40%)of all cars are lemons.Which of the following statements is true?

Some software firms require that applicants have passed certain standardized certification tests before being hired.This policy is necessary when

-The market for used cars is shown in the above figure.Neither buyers nor sellers can tell whether any given car is a lemon.Forty percent (40%)of all cars are lemons.Which of the following statements is true?

If a student achieves a high SAT score,this

Government mandated safety standard within firms

New smart phone applications are developed to help consumers find the cheapest prices in the neighborhood.As a result,

If a college degree is used to signal high ability,but the cost of a college degree is relatively high,

Explain why some people who are applying for a job at a bank dress up,arrive early,and have their paperwork neatly completed for the job interview.

the Internet has made it possible to compare lots of prices without incurring a lot of cost.If internet access is unequally distributed throughout the population one would expect

Firms under-invest in safety because

For the following, please answer "True" or "False" and explain why. -Signals can help prevent adverse selection as long as a false signal is costly to the person sending it.

How can a warranty at the seller's expense signal that a product is of high quality?

If getting accepted into college is very difficult because of high standards of intelligence and ability,but students learn absolutely nothing while in college,it is most likely that

A person who generally drives without a seat belt on does not reveal this to his automobile insurance company before he purchases insurance.This is an example of