Alex is hired as a sales agent and receives 10% commission on the sales price. The contract he signed is a
A) fixed-fee contract.
B) hire contract.
C) contingent contract.
D) sharing contract.
D
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One possible solution to an incentive problem arising under unobservable actions is:
A. to be the boss and fire the inefficient worker and send a signal to others. B. to pay more and make the worker efficient. C. to sell the agent the right to the total production. D. to buy the agent's right to his total output.
Refer to Exhibit 6-2. The labor force participation rate in year 4 is
a. 12 1/2 percent. b. 72 percent. c. 87 1/2 percent. d. 30 percent. e. 80 percent.
The marginal benefit of additional information:
A. is independent of the amount of information that has already been acquired. B. rises as more information is collected. C. falls as more information is collected. D. tends to be lower for expensive items than inexpensive items.
How wages are determined is best described by
A. political and social forces (such as unions) only. B. economic factors only. C. government regulation only. D. economic factors, with strong influences by political and social forces (such as unions).