Norah works as a content writer for an online magazine. Because her work is not evaluated daily, she often spends her time playing online games, which adversely affects the quality of her work
a) What is the term used to refer to such behavior? b) What is the solution to this problem? Explain your answer.
a) The term used to refer to Norah's behavior is moral hazard. Moral hazard refers to actions that individuals take based on their own private information that is unavailable to the other party in the transaction but adversely affects their payoff. In this case, only Norah knows how much attention she pays to her work. This information is unavailable to her boss.
b) The management can motivate workers like Norah to work harder by offering efficiency wages. Efficiency wages are wages above the lowest pay that workers would accept and that employers use to increase workers' motivation and productivity.
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The value of goods, services, incomes or wealth subject to taxation is
A) the tax base. B) a sales tax. C) the collected tax revenue. D) a unit tax.
It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries. If Firm A merges with firm B, it can produce both the five radios and the five batteries for $1500 . The firm has experienced
a. Economies of Scale b. Economies of Scope c. Diseconomies of Scale d. Diseconomies of Scope
Which of the following is an economic argument that supports income inequality?
a. If given extra money, the poor would spend it on frivolous items. b. The poor have the same chance of being rich as anybody else. c. If people have the same incomes, this will lead to social stability. d. It is only fair that people's incomes reflect their contribution to society. e. If there are poor people, the rich will have some place to bestow their largess.
If autonomous consumption decreases, the size of the multiplier would
A. increase. B. remain constant. C. decrease. D. either increase or decrease depending on the size of the change in autonomous consumption.