Air travel from New York to Miami costs $300 and takes 6 hours. A bus ticket between the cities costs $150 and takes 56 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be
a. $1 per hour.
b. $3 per hour.
c. $5 per hour.
d. $50 per hour.
B
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When bank loan officers screen loan applicants to eliminate potentially bad risks, they are attempting to mitigate the problem of
A) adverse selection. B) moral hazard. C) interest rate risk. D) illiquidity.
A risk-averse manager is hired to run a firm for shareholders. If shareholders cannot observe the manager's effort, which would be the best employment contract?
a. a high-powered incentive contract to elicit maximum effort. b. a fixed salary. c. a moderately powered incentive scheme that elicits some effort without exposing the manager to too much risk. d. an incentive scheme that provides maximum incentives and maximum insurance.
Which of the following were descendants of the Standard Oil Trust?
A. Exxon B. Mobil C. Marathon Oil D. All of the choices are correct.
Which of the following mandates that an import distributor must buy a certain percentage of the product locally?
A. A voluntary export restraint B. An import quota C. A mixing requirement D. None of the above