Give, and explain, an example of conflict between objectives in considering an investment proposal
What will be an ideal response?
Perhaps the most obvious conflict mentioned in the chapter is between maximizing output and maximizing employment. A broader response, involving private vs. social returns, can also be used.
You might also like to view...
The manager-stockholder conflict generally becomes worse
A) the smaller the firm. B) the larger the firm. C) the more the firm borrows from banks. D) the less the firm borrows from banks.
The effects of a tariff are
A) reduced quantity supplied overall, reduced quantity supplied by domestic producers, and a lower price. B) reduced quantity supplied overall, increased quantity supplied by domestic producers, and a higher price. C) reduced quantity supplied overall, decreased quantity supplied by domestic producers, and a lower price. D) identical to the effects of a quota, except that the price of the good is higher.
In terms of insurance, which of the following statements is explained by adverse selection?
A. A person with riskier characteristics tends to be more likely to buy insurance. B. A person who is more risk-averse tends to be more likely to buy insurance. C. Insurance companies charge risk-averse customers a higher premium, since they need more peace of mind. D. None of these statements is true.
Which of the following would tend to shift the production function upward?
a. an increase in the number of hours worked b. an increase in population c. an increase in the size of the labor force d. an increase in the level of technology