A principal-agent problem arises when
a. only less-qualified workers apply for a job
b. a firm must find a proxy for unobservable qualities needed in employees
c. potential employees have more information about their own productivity than do prospective employers
d. a customer knows little about the service provided by a business
e. a customer knows little about the service provided by a business and is, therefore, given poor service
E
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To an economist, total costs include
A) explicit, but not implicit costs. B) implicit, but not explicit costs. C) explicit and implicit costs. D) neither explicit nor implicit costs.
Refer to Scenario 2.2. What is the effect of the BBP on the equilibrium price of dental care?
A) It unambiguously increases. B) It unambiguously decreases. C) It increases only if supply shifts more than demand. D) It increases only if demand shifts more than supply.
The substitution effect isolates the change in the consumption of a good caused by:
A. the change in consumer preferences. B. the change in the market rate of substitution. C. the lower "real" income. D. None of the statements is correct.
Sally lost her job when her company went out of business because of a recession. This is an example of:
A. frictional unemployment. B. structural unemployment. C. cyclical unemployment. D. technological unemployment.