If an agent is risk neutral and a principal is risk averse, which of the following contracts would be efficient in risk bearing?
A) A fixed fee is paid to the agent.
B) A fixed fee is paid to the principal.
C) An hourly rate is paid to the agent.
D) The agent enjoys a share of the profit.
B
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In perfect competition, what is the relationship between the demand for the firm's output and the market demand?
What will be an ideal response?
How do targeted asset purchases alter the outlook for the economy and inflation?
What will be an ideal response?
If an industry has 4 firms, with the largest firm being twice as large as any other one (the 3 remaining firms are equal in size), the 4-firm concentration ratio of this industry would be
A. 0.4 B. 1 C. 0.5 D. not enough information is provided
Abby's reservation price for working in a risky job is $5 per hour while Rudy's reservation price for working in a risky job is $8 per hour. Characterize Abby and Rudy's job selections if safe jobs pay $12 per hour and risky jobs pay $18 per hour.
A. Rudy works a risky job while Abby does not care which type of job she works. B. Abby works a safe job while Rudy works a risky job. C. Abby and Rudy both work risky jobs. D. Abby works a risky job while Rudy works a safe job. E. Abby and Rudy both work a safe job.