Exam 9: Imperfect Information, External Benefits, and External Costs

Which of the following is the least likely example of asymmetric information?

The free-rider problem implies that

Figure 9.10 -The pollution tax in Figure 9.10

A carbon tax could reduce greenhouse emissions by

Figure 9.3 -Figure 9.3 represents the market for used refrigerators. Suppose buyers are willing to pay $300 for a plum (high-quality) used refrigerator and $100 for a lemon (low-quality) used refrigerator. If buyers believe that 50% of used refrigerators in the market are lemons (low quality), how many plums (high quality) will be supplied by sellers?

Table 9.8 -Table 9.8 shows the production cost for two utilities at different levels of sulfur dioxide emissions. Assume that the government issued 8 marketable pollution permits to each firm. If Firm A contemplates selling a second permit to Firm B, what is Firm A's willingness to accept?

Asymmetric information exists in the market for used cars because

One consequence of imperfect information in the health insurance market is that

An example of a good that is nonexcludable is

Table 9.2 -Refer to Table 9.2. In which market do buyers underestimate the chance of getting a lemon?

Why should a system of marketable pollution permits lead to less costly pollution abatement than a command-and-control system?

Another name for a system of marketable permits is ________.

Table 9.3 -Table 9.3 represents 3 markets for used stereos. Which of the markets in Table 9.3 are in equilibrium?

People who apply for loans know more about their ability to repay the loan than the lenders do. This is an example of

Protecting endangered species is NOT an example of a public good because there are no external benefits associated with it.

The price at which marketable pollution permits are sold is set by the government.

Recall the Application about how having car insurance affects driving behavior to answer the following question(s). -Recall the Application. Explain the effect of mandatory car insurance laws on the number of traffic accidents and fatalities.

Recall the Application about the free-agent market for professional baseball pitchers to answer the following question(s). -Recall the Application. Baseball players who switch teams are more likely to suffer from injuries because the player's ________ team has superior information concerning the health of the player and, if they believe the player will be prone to injury in the future, they ________ be willing to outbid another team.

Figure 9.4 -Figure 9.4 represents the market for used 12 megapixel digital cameras. Suppose buyers are willing to pay $400 for a plum (high-quality) used digital camera and $200 for a lemon (low-quality) used digital camera. If buyers believe that 50% of used digital cameras in the market are lemons (low quality), how many plums (high quality) will be supplied by sellers?

Figure 9.3 -Figure 9.3 represents the market for used refrigerators. Suppose buyers are willing to pay $300 for a plum (high-quality) used refrigerator and $100 for a lemon (low-quality) used refrigerator. If buyers believe that 50% of used refrigerators in the market are lemons (low quality), how many lemons (low quality) will be supplied by sellers?