Suppose employees pay a bond of $1,000 to an employer. The gain from shirking is $400. Monitoring devices have been installed so that there is a 50% chance of being caught if you are shirking
The company is considering the installation of additional monitoring devices to increase the chance of catching a shirker to 100%. They feel this is needed to deter all shirking. What is your recommendation to the company? Explain.
Shirking is already deterred; the company does not need any more monitoring devices. The employee gains $400 by shirking but has an expected loss of $500 (loses $1,000 with 50% probability).
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When the Fed increases the money supply
A) the interest rate rises and this stimulates consumption spending. B) the interest rate falls and this stimulates investment spending. C) the interest rate rises and this stimulates investment spending. D) people spend less because they have more money.
Dave and Buster play two games of tennis, and then decide to go have lunch. Using the concept of utility to explain their choices, we can conclude that:
A. they each won one game of tennis. B. the marginal utility from playing a third game must be negative for them. C. the marginal utility from playing a third game must be less than the marginal utility from having lunch. D. All of these must be true.
Suppose that at the prevailing euro-dollar exchange rate there is an excess demand for dollars. To stabilize exchange rates, the United States might
A. Reduce government spending. B. Raise taxes. C. Raise interest rates. D. Decrease trade restrictions on euro-priced goods.
The reoccurrence of contagious diseases should be significantly lower in a technically advanced nation such as the United States. This statement is best described as
A. a marginal statement. B. an implication of an efficient market. C. a normative statement. D. a positive statement.