Sam hires an attorney to present a court case. If Sam wins the case, he will receive some money. This payoff is a function of the attorney's hours and which judge is assigned the case that day. Judge A is very understanding toward people in Sam's position, but judge B is very harsh toward people like Sam. Is it possible for Sam to get the attorney to deliver the optimal amount of effort and make
the attorney bear all of the risk?
What will be an ideal response?
Yes. If Sam accepts a fixed payment from the attorney and lets the attorney keep the proceeds, if any, from the case, the attorney bears all of the risk. Since the attorney will enjoy the full marginal benefit of her effort, she puts in the optimal level of effort.
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Use the following two statements to answer this question: I. The price elasticity of demand is constant along the entire length of a linear demand curve. II
The price elasticity of demand is the special name that economists give to the slope of a demand curve. A) I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) I and II are false.
The basic liberal solution to welfare dependency is __________.
Fill in the blank(s) with the appropriate word(s).
Economists would predict that, other things the same, the more generous unemployment compensation a country has, the
a. shorter the duration of each spell of unemployment and the higher the unemployment rate. b. shorter the duration of each spell of unemployment and the lower the unemployment rate. c. longer the duration of each spell of unemployment and the higher the unemployment rate. d. longer the duration of each spell of unemployment and the lower the unemployment rate.
The unemployment rate is the:
A. percentage of the labor force that is out of work. B. percentage of the population that is out of work. C. number of workers unemployed. D. number of workers in the labor force.