What do we mean when we state that a particular principal-agent payment scheme is inefficient?
A) The principal and agent could find another agreement that would increase the sum of the owner's revenue and the worker's payment.
B) The agreement involves the highest level of effort for the worker.
C) The agreement leads to the lowest level of revenue for the owner.
D) The sum of the income taxes paid by the owner and the worker is too high.
A
You might also like to view...
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
How will an increase in price tend to affect demand?
a. Demand will increase. b. Demand will decrease. c. Demand will not change. d. Uncertain.
Figure 33-1
?
Which of the following is true about the economy depicted in Figure 33-1?
A. Tax incentives are being used to stimulate aggregate supply. B. Policymakers believe the costs of unemployment are higher than the costs of inflation. C. Contractionary monetary policy is being enacted to fight inflation. D. Prices are rising but real GDP is falling.
If a restaurant runs a special and sells a lobster dinner for $4.50, Amy buys one lobster dinner a week. If lobster dinners are not on special and the price is $16.00, Amy buys zero lobster dinners per week. Which of the following is true?
A. Amy's marginal utility from a lobster dinner is greater than $16.00. B. Amy's demand for lobster is inelastic. C. Amy's marginal utility from a lobster dinner is less than $4.50. D. The value of Amy's marginal utility from a lobster dinner is at least $4.50 and less than $16.00.