Peter was recently hired as a salesman for a national consulting firm. His job involves spending a significant portion of his time out of the office visiting prospects and attending conferences. Which of the following is a strategy the consulting firm may employ to discourage Peter from shirking his responsibilities?
a. Tell Peter that the shareholders want to earn a large profit this year.
b. Pay Peter commissions on what he sells after the work has been completed.
c. Allow Peter to set his own schedule and work from home frequently.
d. Pay Peter a lower wage than he would earn in a similar job at another firm.
b
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The "constant dollar" price is:
A) the real price of a good. B) the nominal price of a good adjusted for inflation. C) the "current dollar" price adjusted for inflation. D) all of the above E) none of the above
Many firms have implicit and explicit costs. The difference between them is that implicit costs
a. are taken into consideration for tax purposes while explicit costs are not b. are the same as explicit costs but are internalized within the firm, such as hiring labor c. are part of accounting costs while explicit costs are not d. represent actual money payments to factors of production while explicit costs do not e. although not involving money payments are the opportunity costs of resources used by the firm
Andrew buys yogurt, and he would be willing to pay more than he now pays. Suppose that Andrew has a change in his tastes such that he values yogurt more than before. If the market price is the same as before, then
a. Andrew's consumer surplus would be unaffected. b. Andrew's consumer surplus would increase. c. Andrew's consumer surplus would decrease. d. Andrew would be wise to buy less yogurt than before.
High marginal income tax rates
a. distort incentives to work. b. are used to encourage saving behavior. c. will invariably lead to lower average tax rates. d. are not associated with deadweight losses.