Which of the following CORRECTLY characterize principals and agents in important examples of the principal-agent problem?
A) In the doctor/patient relationship, the patient is the principal and the doctor is the agent.
B) In the lawyer/client relationship, the client is the principal and the lawyer is the agent.
C) Both of the above answers are correct.
D) Neither of the above answers is correct.
C
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Erin and Deidre, two residents of Ithaca, New York, are planning a trip to Boston. Erin, the sales manager for a large retailer, has to attend a business meeting
Deidre, a college student on vacation, is planning a leisurely trip to visit friends and relatives. Which of the following statements is true? A) Since there is no difference in the cost of producing air travel, airlines will not charge different prices to Erin and Deidre. B) An airline cannot price discriminate because buyers can resell their tickets through the Internet. C) An airline that price discriminates will charge Erin a higher price. D) An airline that price discriminates will charge Deidre a higher price.
Use Tobin's q theory and the neoclassical theory of investment to explain why investment rises so rapidly once the economy has passed the trough of a business cycle
What will be an ideal response?
Do you agree that currency depreciation will lead to an increase in the debt burden of the companies that borrow in foreign currency? Explain with an example.
What will be an ideal response?
When economies of scale are present, but are not sufficiently large to generate a natural monopoly, the expected market structure is:
A. monopoly. B. monopolistic competition. C. perfect competition. D. oligopoly.