Author Question: Consider a market in which high-quality and low-quality television sets are sold. Before consumers ... (Read 113 times)

justinmsk · **on:** Jul 1, 2018

Consider a market in which high-quality and low-quality television sets are sold. Before consumers make a purchase, they do not know the quality of the sets, but the sellers do know.

As compared to a situation where both consumers and sellers know the quality of the sets, this situation would A) cause no change in the ratio of low to high-quality sets sold.
B) increase the fraction of high-quality sets sold.
C) increase the fraction of low-quality sets sold.
D) cause the average price of goods sold to rise.

Question 2

Consider a good whose own price elasticity of demand is -0.5 and price elasticity of supply is 1.5. The fraction of a specific tax that will be passed through to consumers is ________.

A) 0
B) 0.25
C) 0.5
D) 0.75
E) 1