Shay is risk averse and has a reservation wage of $50. She is offered two different labor contracts. One is a fixed wage of $100 per day, and the other is a piece-rate contract. In the latter, the pay rate is $1 per piece. In a good day she sells 160 units, and in bad day she sells 40 units. The likelihood of a good or a bad day is 50%
A) Shay accepts the fixed wage contract.
B) Shay declines both contracts.
C) Shay accepts the piece-rate contract.
D) Shay is indifferent between both contracts.
A
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Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
Command systems in the Soviet Union and pre-reform China failed primarily because of:
A. the failure to accumulate and use capital. B. greater resource scarcity than in market systems. C. the failure to specialize in production. D. coordination and incentive problems.
In the United States, major league baseball is exempt from antitrust laws. Before 1975, the baseball team owners agreed to hold an annual draft of amateur baseball players
Once the players were drafted and signed by a team, they were effectively tied to that team for life. This allowed baseball owners to operate like ________ in the market for player services. A) perfect competitors B) monopolistic competitors C) a monopsonistic cartel D) a monopoly
In what way is the result of an excise tax imposed on either demanders or suppliers similar to the result of a price floor?
a. The amount that consumers pay for the good will be less than they previously paid b. The amount of the good that will be traded in the market will be greater than previously traded c. both price floors and excise taxes create excess demand d. The amount that consumers pay for the good will be greater than they previously paid e. Both price floors and excise taxes create excess supply