The Automobile

question 97

Multiple Choice

The automobile.

• A) spurred growth in other industries such as tourism and steel production.
• B) was actually not affordable to the vast majority of Americans until the 1930s.
• C) limited the expansion of most other sectors of the American economy in the 1920s, due to U.S. manufacturers' focus on outpacing the rest of the world in its production.
• D) exacerbated the divide between rural and urban America in the 1920s.

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Definitions:

Agent

In economics, an agent is an individual or entity that makes decisions, often in the context of trading or negotiating, on behalf of another person or group.

Informational Asymmetry

A situation where one party in a transaction has more or superior information compared to another. This often leads to an imbalance in power or decision-making.

Hidden Action

A situation in principal-agent relationships where the agent's actions are not fully observable by the principal, potentially leading to agency problems.

Hidden Characteristic

A quality of a product or service that is not immediately observable to the buyer, often leading to information asymmetry in the market.