Which of the following is not an example of a principal-agent relationship?
a. a soccer player and her coach
b. a man and his neighbor
c. an construction worker and his foreman
d. a driver and her insurance agent
b
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Read Eye on Price Regulation on p. 185 and explain why a mismatch between intention and outcome is inevitable if a price regulation seeks to block the laws of supply and demand
What will be an ideal response?
According to the concept of rational expectations
a. budget deficits are irrelevant to output in the short-run. b. higher deficits should increase output in the short-run if they are expected. c. lower deficits can be used to stabilize output during expansions. d. none of the above.
When we say the cost of living has gone up, we mean that, looking broadly over a range of goods and services:
A. a dollar buys less today than it used to buy. B. a dollar buys more today than it used to buy. C. a dollar buys the same today as it used to buy. D. our income has increased to match the cost of those goods.
The marginal fixed cost of a firm:
a. is a positive constant irrespective of output level. b. declines as output is increased because a fixed numerator is divided by an ever-growing denominator. c. generally increases as output is increased. d. is equal to average variable cost and average total cost at their minimum points. e. is always equal to zero and is therefore ignored by economists.