The cost savings from outsourcing often lead to ________ for consumers and ________ for the outsourcing company.
A. lower prices; less output
B. lower prices; more output
C. higher prices; less output
D. higher prices; more output
Answer: B
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Refer to Table 5.4. If at Job B the $20 outcome occurs with probability .2, and the $50 outcome occurs with probability .8, then the standard deviation of payoffs at Job B is nearest which value?
A) $10 B) $12 C) $20 D) $35 E) $44
Which of the following workers would be most likely to work fewer hours as a result of a wage increase?
A. Farm worker B. Surgeon C. Lifeguard D. Bartender
In the late 1990s, debt-financed government spending decreased in Mexico. Following this decrease, consumption spending increased. Ricardian equivalence would explain this increase in consumption as the result of:
a. people's expectation of higher future taxes required to pay off government debt. b. people's expectation of lower future taxes that induce them to save less. c. automatic stabilization of the economy. d. the crowding out effect. e. an increase in current household disposable income.
Moral hazard can be avoided by:
A. removing the asymmetric information. B. employers monitoring employee effort. C. employers incentivizing employees to maintain consistent effort. D. All of these statements are true.