In the presence of asymmetric information, a hire contract
A) achieves production efficiency.
B) can lead to opportunistic behavior on the part of the agent.
C) is impossible to write.
D) will result in the principal earning all of the profit.
B
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Government intervention can increase total welfare when
A) there are costs or benefits that are external to the market. B) consumers do not have perfect information about product quality. C) a high price makes the product unaffordable for most consumers. D) all of the above E) A and B only
Paul and David work for the same company and have the same job title, education, work experience, and are equally skilled at what they do. Paul works the night shift and is paid $60,000 a year, while David works a regular day shift and is paid $55,000 a year. Which of the following is the best explanation for why Paul earns more than David?
a. Paul has more human capital than David. b. David has more human capital than Paul. c. Paul has received a compensating differential. d. Aside from pay, the night shift is more desirable than the day shift.
"Duty-free" shops in airports and on international boats sell merchandise that can be brought into the country without which of the following?
(A) Restrictions on resale (B) Political embargoes (C) Import tariffs (D) Restrictions on quantity
According to the above figure for a gasoline market, an increase in the price from $2 to $4 will result in
A. a shortage of 30 million gallons. B. an increase in quantity demanded of 10 million gallons. C. an increase in demand of 20 million gallons. D. an increase in quantity supplied of 20 million gallons.