Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point E necessarily represents
A. only motorcycles being produced.
B. overallocation of resources.
C. an impossible production point.
D. technological advancement.
Answer: A
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What will be an ideal response?
Which of the following is not a common response to the moral hazard problem that employers face?
a. offering all employees some funding for additional education b. paying efficiency wages c. requiring employees to provide itemized receipts for reimbursable expenses d. paying year-end bonuses rather than higher monthly earnings
When marginal revenue is positive for a linear (inverse) demand function, decreases in output will cause total revenues to:
A. decrease. B. remain unchanged. C. increase. D. There is not sufficient information to answer the question.
You own a car dealership and pay all of your sales people a flat salary. As a result, they don't work very hard to generate sales. This is an example of
A. an externality. B. adverse selection. C. logrolling. D. moral hazard.