The problem of moral hazard is a problem of hidden action
a. True
b. False
Indicate whether the statement is true or false
True
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Antitrust enforcement of vertical relationships is generally focused on
a. The dominant firm using vertical contracts to extend market power to other levels of the supply chain b. Vertical contracts that increase the intensity of competition c. Vertical contracts that help consumers d. All of the above
Greater equality in income is supported by the argument that it
A. Increases incentives to work for low-income earners. B. Increases horizontal equity. C. Strengthens the link between effort and reward. D. Stimulates consumption.
The end result of individual choices may be different from what one individual intends.
Indicate whether the statement is true or false.
Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her explicit costs for her new business include:
A. only the expenses incurred for office space, equipment, and supplies. B. only her forgone salary of $42,000 per year. C. neither the expenses incurred for office space, equipment, and supplies nor her forgone salary of $42,000 per year. D. both the expenses incurred for office space, equipment, and supplies and her forgone salary of $42,000 per year.