The manager institutes an incentive structure to ensure:
A. the firm produces on the production function.
B. the firm produces above the production function.
C. workers are in fact working at their utility-maximizing effort level.
D. workers are in fact working at the expected potential.
Answer: A
You might also like to view...
Which of the following is correct?
a. Policy lags are normally much shorter for fiscal policy than for monetary policy. b. Congress usually makes major fiscal policy changes in a fairly short period of time. c. Expenditure lags are much longer for investment, the main way in which monetary policy affects aggregate demand. d. Monetary policy affects aggregate demand more quickly than fiscal policy, such as tax or government spending changes.
Suppose a policy intervention is correlated not just with level differences among units but is also correlated with trend differences. Which of the following analysis would be the most appropriate?
A. Fixed effects B. First-differenced C. Heterogenous trend D. Random effects.
Pie-Oh-My, a monopolistically competitive firm, is producing 80 gourmet pies per day and selling each pie for $32. At that production level ATC is $40, AVC is $30, AFC is $10, and both MR and MC are $16. In the short run, this firm should
A. continue to produce 80 pies, as price is greater than AVC. B. increase output to the point where price equals marginal cost. C. shutdown and produce zero pies and pay fixed costs. D. decrease output to the point where price equals average total cost.
In 1973, the Organization of Petroleum Exporting Countries (OPEC) engineered a quadrupling of oil prices by restricting oil production. Which of the following is an appropriate description of this negative supply shock?
A) The AS curve likely shifted to the left and output likely fell because of this adverse shock. B) In the short-run there was a movement out of general equilibrium leading to an increase in inflation as a likely result of this adverse shock. C) In the short-run there was a movement out of general equilibrium leading to an increase in unemployment as a likely result of this adverse shock. D) all of the above E) none of the above