One possible solution to an incentive problem arising under unobservable actions is:
A. to be the boss and fire the inefficient worker and send a signal to others.
B. to pay more and make the worker efficient.
C. to sell the agent the right to the total production.
D. to buy the agent's right to his total output.
Answer: C
You might also like to view...
The above figure shows the demand and supply curves for housing in City B. What would be the effects of a rent ceiling equal to $1000 per month?
A) a surplus equal to 3000 apartments B) a surplus equal to 250 apartments C) a shortage equal to 3000 apartments D) nothing because the rent ceiling has no effect on the equilibrium price and quantity
If the marginal product of an input is negative, the total product must also be negative
a. True b. False
The Bureau of Labor Statistics produces data on unemployment, types of employment, length of the average workweek, and the duration of unemployment
a. True b. False Indicate whether the statement is true or false
While the slope of the perfectly inelastic supply curve ________, the slope of the perfectly elastic supply curve ________.
A. is zero; approaches infinity B. approaches infinity; approaches infinity C. is zero; is zero D. approaches infinity; is zero