Which of the following is an example of moral hazard?
A) I hire you to work in my garden for a fixed fee, and you work hard all day.
B) I hire you to work at an hourly rate and you work as slowly as possible.
C) You apply for the job only because I pay a fixed wage per day, no matter how much or little you do.
D) You agree to be paid by the weed to work in my garden, and then don't work hard.
B
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National income is defined as gross national product minus
a. depreciation and net taxes. b. national income. c. depreciation. d. personal disposable income.
A natural monopoly exists when, throughout the range of market demand,
a. average cost is increasing b. there are diseconomies of scale c. average cost is decreasing d. average cost is constant e. marginal cost exceeds average cost
If price falls, what happens to the demand for a product?
a. It increases. b. It decreases. c. It does not change. d. Uncertain--economic theory has no answer to this question.
Suppose that labor is the only productive resource needed. Scotland has a comparative advantage in producing firewood, while Iceland has a comparative advantage in producing wool. If the two nations trade with each other,
A. Scotland should export wool and Iceland should export firewood. B. Scotland should export both wool and firewood. C. Scotland should export firewood and Iceland should export wool. D. Iceland should export both wool and firewood.