If a principle is reducing agency costs by gathering information about the agent's type, he is most likely trying to solve the problem
a. Adverse selection
b. Moral hazard
c. Both of the above
d. None of the above
a
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Monopolistic competition occurs in a market with free entry:
A. when there are only a few firms, each producing a unique product, prices above marginal cost and earns zero profit net of fixed costs. B. when there is a large number of firms, each producing an identical product, prices above marginal cost and earns zero profit net of its fixed costs. C. when there is a large number of firms, each of which produces a unique product, prices above marginal cost and earns zero profit net of its fixed costs. D. when there is a large number of firms, each of which produces a unique product, prices above marginal cost and earns a positive profit net of its fixed costs.
An initial public offering
A. Increases the percentage of the company owned by the management and original entrepreneurs. B. Indicates the demand for a company's new product. C. Allows a company to raise money without increasing debt. D. Allows a company to borrow funds for investment and growth.
A higher real interest rate ________ saving and ________ consumption spending.
A. increases; decreases B. does not change; does not change C. increases; increases D. decreases; increases
There is asymmetric information in the used car market because sellers cannot distinguish between lemons (low-quality) and plums (high-quality), but buyers can.
Answer the following statement true (T) or false (F)