While many managers and lawyers might claim that implicit contracts "aren't worth the paper that they are not written on," most understandings between companies and their customers and employees are implicit. Why?
What will be an ideal response?
Repeated interactions and reputations can create powerful incentives for cooperation. The threat of future lost business and a bad reputation often leads people to abide by implicit contracts. In dealings with employees, breaches of implicit contracts could lead to higher employee turnover, which could be costly to the firm.
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If country A can produce more of practically everything than can country B, then which of the following statements is true?
A. Country B has no incentive to trade with country A. B. Trade can benefit both countries. C. Country B cannot have a comparative advantage in the production of any good that country A wants to buy. D. Country A has no incentive to trade with country B.
Why is a discounted airline fare a price discrimination that can be offered?
(A) Because people who fly on business want the price discounts but do not qualify. (B) Because senior citizens qualify for discounts on certain types of flights but not on others. (C) Because people do not necessarily want to go where the discounts will allow them to go. (D) Because vacationers are willing to put up with the restrictions that the airlines impose.
Suppose the cost function is C(Q) = 50 + Q ? 10Q2 + 2Q3. At 10 units of output, the average cost curve is:
A. in the declining stage. B. at the minimum level. C. at the maximum level. D. in the increasing stage.
Producers of close substitutes have little or no incentive to merge.
Answer the following statement true (T) or false (F)