A firm uses an efficiency wage scheme to deter workers from shirking. Suppose a risk-neutral worker that has a reservation wage of $1000. The industry ongoing wage is $2,000. The efficiency wage paid by this firm is $7,000. What is this firm's shirking detection rate?
A) 5%
B) 20%
C) 10%
D) 25%
B
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Using the information in the table above, calculate the number of people in the labor force
A) 2500 B) 2100 C) 1500 D) 800
When insurance companies use observable information about people to reveal private information, it is called ______.
a. adverse selection b. asymmetric information c. screening d. standardization
In principle, a cap-and-trade program would
A. lower the production costs of all firms. B. raise the production costs of all firms. C. cause firms to generate more pollution than their allowed limits. D. cause firms to generate less pollution than their allowed limits.
Assume the union contract wage exceeds the market-clearing wage. If there is an increase in the labor supply, then the number of unemployed workers will ______ and the number of employed workers will _______.
1) increase; increase 2) decrease; increase 3) increase; decrease 4) increase; not change