A firm produces output at a higher cost than is necessary to produce it. This statement describes:
a. economies and diseconomies of scale.
b. x-inefficiency.
c. the law of diminishing returns.
d. the law of diminishing marginal utility.
Ans: b. x-inefficiency.
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Moral hazard arises when principals find it costly to monitor agents
Indicate whether the statement is true or false
In the work-leisure model, suppose consumption and leisure are both normal goods. The income effect of a wage increase results in the worker choosing to
a. work less than before. b. work more than before. c. possibly work more or less than before. d. work more with a higher level of consumption.
Growth in GDP per capita is attained when
A. There is growth in output. B. Population is held constant. C. There is growth in population. D. The growth of output exceeds population growth.
Commitments to make or receive payments in the future are made easier by money's function as a _____
a. unit of account b. store of value c. medium of exchange d. form of barter e. commodity