The XYZ Co is hiring salespersons. They will be paid a very attractive hourly rate that is independent of how much they sell. Describe an adverse selection that would take place. Describe a moral hazard that would take place
What will be an ideal response?
The adverse selection occurs when only below-average salespeople apply for the job. Above-average salespeople know they are good and would prefer a commission so that their income increases with their performance. Below-average salespeople do not like to work on commission because it lowers their income. The moral hazard occurs when the salespeople, once hired, are less productive than they would be if they were paid a commission instead of an hourly wage.
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According to the survivor principle
A) firms will get taken over by their larger rivals over time. B) only firms that maximize profits survive in highly competitive markets. C) managers only work hard if they are threatened with their survival at the firm. D) eventually all firms merge to become one large monopoly.
The table below shows cost data for a perfectly competitive firm.OutputAverage Variable CostAverage Total CostMarginal Cost0---22.5027.502.542.0014.501.562.0010.332.082.138.382.5102.307.303.0122.506.673.5143.006.576.0164.007.1311.0The firm will produce output in the short run only if the market price is at least equal to
A. $6.00. B. $3.00. C. $2.00. D. $3.50.
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the question(s) that follow.
Figure 2.2Refer to Figure 2.2. Full resource employment and production efficiency is represented by a point
A. inside the production possibility frontier. B. outside the production possibility frontier. C. either inside or along the production possibility frontier. D. along the production possibility frontier.
Which of the following statements is true?
A) Opportunity cost = explicit cost - implicit cost. B) Total cost = fixed cost + implicit cost. C) Total cost = fixed cost + variable cost. D) Variable cost = wages + salaries + benefits.