The principal-agent problem arises because of
a. natural selection
b. diminishing marginal returns
c. hidden actions
d. the winner's curse
e. hidden characteristics
C
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If a person who generates a negative externality incorporates into his or her private cost-benefit calculations the effects that this externality will have on third parties, the externality has been
A. substituted. B. accommodated. C. compounded. D. internalized.
An increase in total revenue will result if
A) demand is inelastic and price decreases. B) demand is elastic and price decreases. C) demand is elastic and price increases. D) demand is unitary elastic and price increases.
If a firm is earning a negative economic profit, it means that:
A. the resources should not be invested in other business opportunities. B. more profits could be earned with the same resources in another industry. C. the opportunity cost is smaller than what the firm is earning. D. it must be earning negative accounting profit.
Why isn't the level of personal income always a good measure of the distribution of goods and services?
What will be an ideal response?