On average, if demand is unknown and costs of underpricing are _______ than the costs of overpricing, then _________
a. Smaller; overprice
b. Smaller; underprice
c. Larger; underprice
d. None of the above
b
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A firm deciding to hire a secretary, bases its decision on how well the candidate is trained on certain software. This practice addresses:
a. Adverse selection b. Moral hazard c. Forced bankruptcy d. None of the above
High-income families pay a significantly greater percentage of their income in taxes compared to low-income families.
Answer the following statement true (T) or false (F)
Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his
first year. What are Sebastian's implicit costs from running his own business? a. $30,600 b. $55,600 c. $50,000 d. $75,600
Conspicuous consumption is an effective signal of ability if high-ability people:
A. save most of what they earn. B. tend to have low-paying but prestigious jobs. C. are famous. D. tend to receive the highest salaries.