In a very basic principal-agent model, output is contractible if:
A. output can be observed with some positive cost.
B. the employee produces many products.
C. output can be observed at zero cost.
D. the employee works in a team.
Answer: C
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Central banks:
A. stopped being used after events like the Great Depression proved them useless. B. in the United States oversee the U.S. economy, as well as some developing nations who do not have a central bank. C. exist in almost every major nation. D. are common only to industrialized nations.
Which of the following is an advantage to society of monopolistic competition?
A) production at the lowest possible average cost B) product variety C) only essential costs are incurred D) long-run profitability E) The firms have excess capacity so they are are always willing to increase their production.
The long-term financing dimension of financial management ________.
A) deals with the selection, issuance, and management of long-term debt and equity B) is unaffected by currency changes because everyone borrows in U.S. dollars C) focuses on the analysis of investment opportunities D) is independent of the capital structure of an MNE
Suppose Jordan and Lee are trying to decide what to do on a Friday. Jordan would prefer to see a comedy while Lee would prefer to see a documentary. One documentary and one comedy are showing at the local cinema. The payoffs they receive from seeing the films either together or separately are shown in the payoff matrix below. Both Jordan and Lee know the information contained in the payoff matrix. They purchase their tickets simultaneously, ignorant of the other's choice.
Suppose a timing element is added to the game, and that Jordan buys a ticket first. Then, after seeing Jordon's choice, Lee buys a ticket. What will be the equilibrium outcome?
A. Jordan will buy a ticket to the documentary and Lee will buy a ticket to the comedy. B. Jordan will buy a ticket to the comedy and Lee will buy a ticket to the documentary. C. Both Jordan and Lee will buy a ticket to the documentary D. Both Jordan and Lee will buy a ticket to the comedy.