Because incentive contracts result in more risk placed on the part of agents
a. the average level of compensation typically falls
b. the average level of compensation typically rises
c. compensation is unaffected
d. employers want employees to insure against wild compensation swings
b
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If the annual interest rate is 8%, what would you expect to pay for a bond paying a lump sum of $10,000 in ten years?
A) $4,632 B) $9,259 C) $10,000 D) $21,589
If the quantity effect outweighs the price effect of a price increase, then demand is:
A. elastic. B. inelastic. C. normal. D. unit elastic.
The price of bonds and the interest rate are
A. inversely related. B. positively related. C. related, but we are not sure how. D. unrelated.
Answer the following questions true (T) or false (F)
1. Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas. 2. Because many business situations are repeated games, firms may be able to avoid the prisoner's dilemma and implicitly collude to keep prices high. 3. Firms are more likely to find themselves in a prisoner's dilemma in sequential games as opposed to simultaneous games.