In a principal-agent problem, if the contract implies that the more risk-averse agent will bear less risk, we can say that this contract exhibits
A) efficiency in risk-bearing.
B) risk sharing is not optimal because the less risk-averse (or risk-neutral) agent should bear none of the risk.
C) risk sharing is not optimal because all risk should be transferred to the most risk-averse agent.
D) risk sharing is not optimal because risk-neutral agents should face no risk.
A
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When the money market is drawn with the value of money on the vertical axis, a decrease in the money supply leads people to
a. spend more so the value of a dollar rises. b. spend more so the value of a dollar falls. c. spend less so the value of a dollar rises. d. spend less so the value of a dollar falls.
Educational services provided by public schools are:
A. excluded from GDP because they are intermediate goods. B. included in GDP at market prices. C. excluded from GDP because they are not sold in markets. D. included in GDP at cost.
The labor demand curve shows how many workers the firm is willing to hire
A. at any particular time. B. at a particular amount of labor supplied. C. at any given wage. D. when demand for the firm's output is low. E. into high-skill jobs.
The explanation for why marginal cost is positive and rising in the short run is ________ marginal product of labor in the production process.
A. a constant B. a zero C. an increasing D. a diminishing