Explain what potential conflict exists between shareholders in a corporation and the corporation's managers
What will be an ideal response?
The "principal-agent problem" exists anytime an agent pursues his or her own interests instead of the interests of the principal who hired the agent. In the context of corporations, this can occur if hired managers might not have the same set of goals that corporate owners have.
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The supply of labor is the relationship between __________
A. the quantity of labor supplied and leisure time forgone B. the real wage rate and the quantity of labor supplied C. firms' willingness to supply jobs and the real wage rate D. the labor force participation rate and the real wage rate
Keynes believed that the precautionary demand for money varied
a. negatively with income. b. positively with income. c. negatively with the interest rate. d. positively with the interest rate. e. Both b and c
Demand for science fiction novels is elastic and supply of science fiction novels is inelastic. When the government puts a $2.00 tax on science fiction novels,
a. buyers will pay most of the tax. b. sellers will pay most of the tax. c. buyers and sellers will split the tax evenly. d. elasticity has nothing to do with who pays the tax.
Determine whether each of the following topics would more likely be studied in microeconomics or macroeconomics.
1) The effect of government regulation on a monopolist's production decisions.
2) The government's decision on how much to spend on public projects.
3) The effects of the Internet on the pricing of used cars.