Find an example of a market with a lemons problem, and give facts of market solutions.

How is the increase in post-secondary education (e.g. positive externality) going to effect consumer behavior in the future?

TRUE OR FALSE: In urban economics, the Nash equilibrium outcome is typically greater than the Pareto efficient outcome. What principle in urban economics can explain this?

One method of solving this problem is through signaling. Signaling is a strategy one uses when they have information. The goal is to use a signal to convince the buyer that the good or service that is being sold is quality and will meet the buyer's wants.  Offer an example of a company that uses a signal to help sell its product. What is the signal? What information is the signal trying to convey? Do you think the signal is effective? Why or why not? Does this signal improve market efficiency? Why or why not?

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Suppose there are two consumers A and B, and two goods x and y. A's utility function has the following form UA = XA - (XB)1. Which of the following is true? Consumer A's consumption of good x exhibits a negative externality. Consumer A's consumption of good x exhibits a positive externality. Consumer B's consumption of good x exhibits a negative externality. Consumer B's consumption of good x exhibits a positive externality.

In circumstances of imperfect information should one expect the market to be efficient? Explain briefly.

In Hayward, there are 100 people who want to sell their used cars. Everybody knows that 50 of these cars are "lemons" and 50 of these cars are "peaches." The problem is that nobody except the original owners know which are which. Owners of lemons will be happy to get rid of their cars for any price greater than $200. Owners of peaches will be willing to sell them for any price greater than $1,500 but will keep them if they can't get $1,500. There are a large number of buyers who would be willing to pay $2,500 for a peach but would pay only $300 for a lemon. When these buyers are not sure of the quality of the car they buy, they are willing to pay the expected value of the car, given the knowledge they have. If all 100 used cars in Hayward were for sale, how much would buyers be willing to pay for a used car? Type the number without the thousands separator or $ sign.

Bleecker Street runs from A to B, as shown in the diagram. The lone convenience store currently in operation along this street is at A. An entrepreneur who wants to open another store in the neighborhood is weighing a choice between the only two available locations, C and D. If customers, who are uniformly distributed along Bleecker Street, always shop at the store nearest to where they live, which of the locations C or D would be optimal from the perspective of customers and why? A C D B O Location D because that would minimize the average travel time for customers. O Location D because that would mean each store would get an equal share of the market. O Location C because that would give the new entrepreneur higher profits. O Locations C and D would be equally attractive because consumers have no reason to care about the relative profitability of different entrepreneurs.

You have conducted a study to determine if there is independence or dependence between market segments (A-C) and prices the segments are willing to pay for a product.  The following cross tabular output appears.         Under $10  $11-$15  over $15     All   A             50       30        20     100            50.00    30.00     20.00             33.33    27.27     50.00              16.67    10.00      6.67              50.00    36.67     13.33            0.000    1.212     3.333   B             40       50        10     100            40.00    50.00     10.00             26.67    45.45     25.00              13.33    16.67      3.33              50.00    36.67     13.33            2.000    4.848     0.833   C             60       30        10     100            60.00    30.00     10.00             40.00    27.27     25.00              20.00    10.00      3.33              50.00    36.67     13.33            2.000    1.212     0.833   All          150      110        40     300…