Suppose a firm offers its workers a cafeteria plan in which it allows workers to allocate a set amount of fringe benefit money toward specific insurance. Mary, who has five kids needing braces, selects the family dental coverage. This is an example of
the:
A. free-rider problem.
B. principal-agent problem.
C. adverse selection problem.
D. moral hazard problem.
Answer: C
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Let MP = marginal product, P = output price, and W = wage, then the equation that represents a situation where a competitive firm should lay off some workers to maximize profits is
A) P × MP > W. B) P × MP < W. C) MP × W = P. D) P × MP = W.
All of the following methods can be used to motivate agents to advance the principal's agenda rather than their own except for which one?
A) offering stock options B) offering profit sharing C) offering sales commission D) offering certification
A firm that is a price taker can:
a. substantially change the market price of its product by changing its level of production. b. sell all of its output at the market price. c. sell some of its output at a price higher than the market price. d. decide what price to charge for its product.
In-kind wages are not included in GDP
a. True b. False Indicate whether the statement is true or false