Adverse selection is due to
A) hidden characteristics.
B) hidden actions.
C) symmetric information.
D) moral hazard.
A
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The decision about whether to change prices frequently or infrequently is an application of the:
A. cost-benefit principle. B. scarcity principle. C. principle of comparative advantage. D. principle of increasing opportunity cost.
The components of a well-run incentive compensation scheme include all of the following EXCEPT
a. evaluating the identified performance measures b. avoiding rewards for outcomes that are not included in the performance measures c. demonstrating that evaluators can be influenced with small favors d. identifying the relevant measures on which to evaluate employees
The term allocative efficiency refers to
a. the level of output where MC = AVC b. the equality between MR and MC c. the production of those goods and services most valued by consumers d. the point where marginal revenue equals average total cost e. the production of a good up to the point where AFC = 0
Supply and demand provides the basic explanatory framework for constructing both microeconomic and macroeconomic models.
Answer the following statement true (T) or false (F)