Which one of the following best exemplifies the principal-agent problem in the employer- employee relationship?
A. A worker takes 20-minute coffee-breaks although the employer allots only 15 minutes for
this purpose.
B. A worker is on the job 50 hours per week although only 40 hours are required for
promotion.
C. A worker opts for early retirement in response to the firm's incentive plan.
D. A worker's productivity is independent of the wage paid.
Answer: A
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Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is $3
A) economic surplus is maximized. B) the quantity demanded is economically efficient but the quantity supplied is economically inefficient. C) too many consumers want to buy iced tea. D) the quantity supplied is greater than the economically efficient quantity.
The primary reason for the success of the colonial shipbuilding industry was:
a. the plentiful supply of skilled labor. b. low wages in the American shipbuilding industry. c. a plentiful supply of iron ore. d. the close proximity of raw materials, especially lumber.
In the short run, average variable cost equals:
A. average total cost minus average fixed cost. B. total cost minus total fixed cost. C. total cost divided by output. D. output divided by total cost.
If a boxing fight is shown on pay-per-view television every Saturday at 4pm, the demand curve for each fight is given below.
If the regulated pay-per-view charge to watch a fight were $5 per household, then what would be the loss in total economic surplus relative to when the there is no charge to watch the fight?
A. $225 million B. $625 million C. $50 million D. $25 million