Use the Following to Answer Question(s)

question 203

Multiple Choice

Use the following to answer question(s) :
Exhibit: The Market for Carrots

-(Exhibit: The Market for Carrots) If this is a perfectly competitive market, which of the following is true?

• A) The supply curve is linear and is determined by average total cost.
• B) The equilibrium price and output are determined by demand and supply.
• C) Each firm in this market is a price setter.
• D) The price is too high.

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Definitions:

Negative Expected Value

A statistical condition where the anticipated result of an investment is less than the initial cost.

Moral Hazard

The risk that one party to a transaction has not entered into the contract in good faith or has an incentive to take unusual risks because the costs are not borne by that party.

Flat Salary

A flat salary is a fixed amount of pay received by an employee, regardless of the number of hours worked or the quantity of output.

Car Dealership

A business that sells new or used cars at the retail level, typically based on a dealership contract with an automaker or its sales subsidiary.