The fact that movie star Angelina Jolie's salary is much higher than the salary earned by the world's best nurse can best be explained by the
a. failure of the market to reward talent fairly.
b. large number of nurses.
c. willingness of some people to accept a lower wage rate in order to do work they find personally rewarding.
d. superstar phenomenon.
d
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A large farming operation which uses a potent fertilizer is located up river from a trout farmer. If property rights of the river exist and transactions costs are low, the amount of pollution will be ________
A) efficient only if the trout farmer owns the river B) inefficient if the farming operation owns the river C) efficient if either the farming operation or the trout farmer own the river D) always inefficient
A television station reports that the price of coffee has increased but the quantity sold in the market has decreased. This situation would be caused by a(n):
a. Decrease in supply b. Decrease in demand c. Increase in demand d. Increase in supply
Exhibit 10-4 Supply and demand curves for food servers
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In Exhibit 10-4, the equilibrium wage and the number of food servers employed per day, respectively, are:
A. $2.00 and 5,000. B. $4.00 and 10,000. C. $6.00 and 15,000 D. $8.00 and 20,000.
An insurance company provides liability insurance to a restaurant protecting the owner against claims from customers. One area of coverage is protection against food poisoning claims. The insurance company may periodically send an employee into the restaurant to observe food preparation and food storage processes. The insurance company is trying to avoid:
A. transaction costs. B. moral hazard. C. adverse selection. D. free riding.