A contract that makes a manager's salary dependent on total profit would be a type of incentive-compatible contract.
Answer the following statement true (T) or false (F)
True
This would make profit-maximization in the manager's best interest, as it is in the owner's best interest.
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Suppose a government tax cut increases disposable income. If there is no change in the government deficit or surplus, what effect would this tax cut have on the supply of loanable funds and the demand for loanable funds? What will happen to the real
interest rate?
To calculate the ________ of an alternative, an individual needs to estimate ________ of the alternative
A) marginal benefit; total cost B) marginal cost; total benefit C) opportunity cost; total benefit D) net benefit; both cost and benefit
The total value to society of having garbage removed is greater than the value of baseball games. Why, then, are baseball players paid more than garbage collectors?
A) Garbage removal results in significant external benefits that are not captured in the price paid for garbage removal. As a result, wages of garbage collectors do not reflect their social benefits. B) There is greater competition in the garbage collection industry than there is in Major League Baseball. C) Wages do not depend on total values but marginal values. The marginal revenue product of baseball players exceeds the marginal revenue product of garbage collectors. D) Although the total value of garbage removal is greater than the total value of baseball, wages are determined by average values.
Refer to the data provided in Table 16.1 below to answer the following question(s).Table 16.1 shows the situation facing two firms, both of which are polluting. Assume that each firm emits 5 units of pollution.Table 16.1Firm AFirm AFirm AFirm BFirm BFirm BReduction of Pollution by Firm AMC of reducing pollution for Firm ATC of reducing pollution for Firm AReduction of Pollution by Firm BMC of reducing pollution for Firm BTC of reducing pollution for Firm B1$4$41$8$82 610212203 9193163641332420565185052480Refer to Table 16.1. Suppose the government wants to reduce the total amount of pollution from the current level of 10 to 4. To do this, the government caps each firm's emissions at 2 units and issues 2 permits to each firm. If firms are not allowed to trade permits, what is the
total cost of the pollution reduction? A. $30 B. $55 C. $58 D. $130