The principal-agent problem is
A) often more severe for partnerships than for corporations.
B) often less severe for partnerships than for corporations.
C) severe for corporations but nonexistent for partnerships.
D) most severe for sole proprietorships.
Answer: B
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If potential output equals 8,000 and short-run equilibrium output equals 8,500, there is a(n) ________ gap and the Federal Reserve must ________ real interest rates in order to close the gap.
A. recessionary; not change B. recessionary reduce C. recessionary; raise D. expansionary; raise
The underground economy refers to
a. all market activity that goes unreported to the government b. all market activity that is not subject to government taxation c. all illegal activity d. transactions between U.S. citizens and foreign nationals e. rent-seeking activities on the part of private citizens
If a sandwich shop near campus increases its prices by 5 percent, but revenues from its sales are unchanged, the price elasticity of demand for the services offered by the sandwich shop must be
a. elastic. b. of unitary elasticity. c. inelastic. d. equal to 0.5.
If the price elasticity of demand is 2, this means that a ________ increase in price causes a ________ decrease in quantity demanded.
A. 15%; 100% B. 15%; 10% C. 20%; 40% D. 30%; 20%