Exam 19: Asymmetric Information

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

Some companies subject their applicants to extensive tests.Why?

What could be a potential explanation for a firm selling virtually identical products under different brands?

Assume health insurance is provided universally by the government.This would

The wage of a known high-quality worker,w_h,is $10,000.The wage for a known low-quality worker,w_l,is $4,000.The share of the work force that is of high quality,s,is 0.5.For what value of the cost,c,of a college education that serves only as a signal of a high-quality worker does a pooling equilibrium exist?

The cost,c,of a college education that serves only as a signal of a high-quality worker is $10,000.The wage of a known high-quality worker,w_h,is $30,000.The wage for a known low-quality worker,w_l,is $10,000.For what value of the share of the work force that is of high quality,s,is a pooling equilibrium possible?

If an employer cannot distinguish the ability of workers a separating equilibrium will result.

Firms are able to price discriminate

-The above figure shows the payoff to two firms in an industry deciding to make an investment in worker safety.The dominant strategy for each firm

Workers do not know the safety records at individual firms; they only know industry averages.As a result,

What role does a company like J.D.Power (which provides product satisfaction reviews)serve?

A physical examination is NOT a good screening device for life insurance companies if

For much of its history,General Motors was characterized by having versions of the same car with different nameplates,e.g.,Chevrolet vs.Cadillac.This business model has seemed less successful in recent years.What might explain this?

With asymmetric information among consumers and positive search costs,a firm may

Many people tend to buy multiple cars from the same manufacturer because

Cheap talk works at placing workers in the right job as long as

As long as there is asymmetric information among consumers and positive search cost,if price is below the monopoly price and the same across all firms,then a competitive firm

-The market for used cars is shown in the above figure.Buyers cannot tell whether any given car is a lemon.Ten percent (10%)of all cars are lemons.Which of the following statements is TRUE?

In a labor-market separating equilibrium with high-skill and low-skill workers and where a costly educational degree is used solely as a signal device,we can say that

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