Suppose the probability of an employee being caught shirking, q, is a function of the employer's monitoring, M, such that q = M/100

If workers must put up a $1,000 bond and the gain to each worker from shirking is $100, what is the employer's optimal level of monitoring that is just sufficient to discourage shirking?


Workers are deterred from shirking if q = G/B = 0.10. Ten units of monitoring are necessary to achieve q = 0.10.

Economics

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In a graph of a firm's short-run total costs and total revenue, the total cost and the total revenue curves, respectively, will intersect the vertical axis

A) above the origin, above the origin. B) above the origin, at the origin. C) at the origin, at the origin. D) below the origin, below the origin.

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It is more efficient for a mini-mill to use the worldwide market for scrap steel than to integrate upstream

Indicate whether the statement is true or false

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If the production of a product or service involves external or spillover benefits, then the government can improve efficiency in the market by:

A. imposing a corrective tax to correct for an overallocation of resources.
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C. imposing a corrective tax to correct for an underallocation of resources.
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Economics