Marshall and Lily work at a local department store. Marshall, who greets customers as they arrive, is paid less than Lily, who cleans the bathrooms. This is an example of
a. efficiency wages.
b. a compensating differential.
c. human capital.
d. signaling.
Ans: b. A compensating differential
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One important reason why the United States government is not likely to go bankrupt even with a large public debt is that it has
A. the ability to decrease interest rates and increase investment spending. B. the capacity to pay off its outstanding debt with gold. C. a strong military to protect it from creditors. D. the power to print money to finance the debt.
One way the venture capital firm avoids the free-rider problem is by
A) prohibiting the sale of equity in the firm to anyone except the venture capital firm. B) prohibiting members from serving on the board of directors. C) prohibiting the borrowing firm from replacing management. D) requiring collateral equal to the value of the borrowed funds.
In the long run, total fixed cost:
a. falls. b. rises. c. is constant. d. does not exist.
A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only. B. aggregate demand curve only. C. aggregate demand curve, and the short-run aggregate supply curve would shift in response. D. short-run aggregate supply curve and the long-run aggregate supply curve.