Author Question: In the market for used cars, if there is asymmetric information yet all cars sell for the same price ... (Read 115 times)

KWilfred · **on:** Jul 1, 2018

In the market for used cars, if there is asymmetric information yet all cars sell for the same price

A) there is an efficiency problem and there are equity implications.
B) there is no efficiency problem, but there are equity implications.
C) buyers of lemons win at the expense of buyers of good cars.
D) there is no efficiency problem and there are no equity implications.

Question 2

If AC > p where MR = MC

A) firms earn positive profits and new firms will enter.
B) firms earn negative profits and existing firms will leave.
C) firms earn zero profits and new firms will not enter and no existing firms will leave.
D) None of the above.