Describe the characteristics of an efficient contract between a principal and an agent

What will be an ideal response?


An efficient contract is efficient in production. The principal's and agent's combined value of the contract is maximized. An efficient contract is also efficient in risk bearing. The risk sharing is optimal so that a relatively less risk-averse person bears more of the risk.

Economics

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Refer to Table 8-17. What is nominal GDP in 2016?

A) $3,320 B) $3,690 C) $6,360 D) $7,035

Economics

The assumption of diminishing returns in the Heckscher-Ohlin model means that, unlike in the Ricardian model, it is likely that

A) countries will not be fully specialized in one product. B) countries will benefit from free international trade. C) countries will consume outside their production possibility frontier. D) comparative advantage will not determine the direction of trade. E) global production will decrease under trade.

Economics

The most important developments that reduced banks' income advantages include

A) the increase in off-balance sheet activities. B) the growth of securitization. C) the elimination of Regulation Q ceilings. D) the competition from money market mutual funds.

Economics

When oligopolistic companies engage in collusion, the companies are involved in a

A) noncooperative game. B) negative-sum game. C) competitive game. D) cooperative game.

Economics