Which of the following is a problem encountered in a transaction involving a principal/agent relationship?
a. Absence of monitoring and supervision
b. Excessive dependence on forecasts and expectations
c. High investment in industry specific assets
d. Government interference and market volatility
A
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Explain why the rate of return from investing in stocks is higher than from investing in bonds
What will be an ideal response?
Which of the following statements about the private production of a public good is true?
a. Private production is not feasible unless government subsidizes it. b. Private production is only possible for pure public goods. c. Private production is always inefficient. d. Private production is provides useful information about consumer preferences.
One of the conditions that must exist for the median-voter theorem to hold is:
A. there is a simple in-favor/not-in-favor position held by each candidate. B. candidates win by majority vote. C. there must be a run-off election in the event of a tie vote between two or more candidates. D. voters may vote for a policy even if it not close to their own beliefs.
Suppose Sue's buys a good for $60 on eBay. If the consumer surplus from the sale is $25, Sue would have been willing to pay:
A. $35. B. $25. C. $60. D. $85.