Figure 9.2 -Figure 9.2 Represents the Market for Used Cameras. Suppose Buyers

question 259

Multiple Choice

Figure 9.2
-Figure 9.2 represents the market for used cameras. Suppose buyers are willing to pay $125 for a plum (high-quality) used camera and $25 for a lemon (low-quality) used camera. Initially buyers believe that 50% of used cameras in the market are lemons (low quality) . Compared to the outcome with neutral expectations, how many fewer cameras are sold in equilibrium?

• A) 10
• B) 15
• C) 20
• D) 25

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Definitions:

Cash Dividend

A payment made by a company out of its profits to shareholders in the form of cash.

Financing Activities

Activities that result in changes in the size and composition of the equity and/or borrowings of a company.

Cash Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits.

Net Cash

The balance of cash remaining once cash inflows and outflows have been reconciled.