To induce an agent to work hard, a principal may offer the agent a bonus, in other words, an extra payment if a performance target is hit
Suppose that the agent's performance is affected by factors beyond the agent's control, for example umbrellas are demanded more on a rainy day. Under what conditions may the bonus not induce the agent to work harder? A) The agent is very risk averse.
B) The agent is very risk loving.
C) The agent is risk neutral.
D) The principal is risk neutral.
A
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A social system in which rights are clearly defined and participants are free to exchange as they choose will tend to allocate resources to
A) their most efficient uses. B) their most highly valued uses. C) uses on which the highest monetary value is placed. D) uses which maximize social welfare. E) uses which produce the greatest good for the greatest member.
Because of the flaws of the concentration ratio as a measure of the extent of competition in an industry, some economists prefer another measure of competition, the Herfindahl-Hirschman Index
Indicate whether the statement is true or false
A general-equilibrium analysis of the impact of a tax on the peanut butter market would include an investigation of the impacts in
A) the television market. B) the coffee market. C) the salsa market. D) the jelly market.
Studies have shown that in the 1980s the wage gap between college-educated workers and those with high school education or less
A. decreased dramatically. B. decreased slightly. C. remained unchanged. D. widened dramatically.