Lec 19 Questions

Lec 19 Questions - A Buyers place no value on a sale’s...

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Econ 101 Class 19 Questions 1. Given the following cost data and a SO2 reduction target of 1200 tons, firm ___ will buy permits to pollute and firm ___ will sell them. SO2 Reduction Marginal Cost per Ton of SO2 Reduction Firm A Firm B Firm C 0-200 $100 $100 $50 201-400 $100 $150 $100 401-600 $100 $200 $150 601-800 $150 $250 $300 801-1000 $150 $300 $500 A. A will buy and B will sell. B. B will buy and A will sell. ** C. B will buy and C will sell. D. C will buy and B will sell. 2. Which of the following best explains the connection between the free rider problem and how hard it is to find a knowledgeable sales clerk?
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Unformatted text preview: A. Buyers place no value on a sale’s clerk’s knowledge. B. Sellers do better when customers are ignorant. C. Sellers believe that merchandise speaks for itself. D. Buyers can take advantage of a clerk’s knowledge without buying. ** 3. Suppose I offer you a gamble. A fair die is rolled. If the outcome is “1”, you pay me $6. If the outcome is “2”, “3”, or “4”, you pay me $1. If the outcome is “5” or “6”, I pay you $8 What is the expected payout of the gamble? A. A loss of more than $1.17 B. A loss of $1.17 C. A gain of $1.17 ** D. A gain of more than $1.17...
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