Mary Jo Smith is willing to work for $3,200 per month. She asks the HR manager at Plain Truth Advertising for $4,000 per month. He was willing to pay only $3,700 per month, so he rejects her application and begins to search for a new employee again. This is an example of
A. agency problem.
B. bargaining failure.
C. value maximization.
D. adverse selection.
Answer: B
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What is the difference between the corporate paper rate and the corporate bond rate?
A) The corporate paper rate refers to interest rates paid on high-quality corporate bonds of relatively short duration (up to 6 months). B) The corporate paper rate refers to interest rates paid on high-quality corporate bonds of relatively long duration (typically 20 years). C) The corporate bond rate refers to interest rates paid on long-term (typically 20 year) corporate bonds that may represent varying quality or risk. D) A and B are correct. E) A and C are correct.
If the union wants to follow the strategy of maximizing member's income, wages should be set
A) above the market clearing wage rate. B) such that all that wanted to work could work. C) at the market clearing wage rate. D) at the point at which the price elasticity of demand equals 1.
In short-run equilibrium, a perfectly competitive firm
A. may earn a profit or a loss. B. always earns a profit. C. never earns a profit. D. earns a profit only if the firm has no fixed cost.
A surplus will occur whenever:
a. The supply curve is upward sloping b. supply equals demand c. Price is set above the equilibrium price d. Price is set below the equilibrium price