Which of the following is NOT an implication of specialized investments that lead to increased transaction costs?
A. Underinvestment in specialized investments
B. Opportunism and the hold-up problem
C. Incentive contracts
D. Costly bargaining
Answer: C
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Suppose real GDP is $12.1 trillion and potential GDP is $12.6 trillion. To move the economy back to potential GDP, Congress should
A) lower taxes by an amount less than $500 billion. B) lower taxes by $500 billion. C) raise government purchases by more than $500 billion. D) lower government purchases by $500 billion. E) raise government purchases by $500 billion.
The increase in output that results when one more unit of a variable input is hired is called
A) total physical product. B) marginal physical product. C) average physical product. D) marginal revenue.
In the long run,
a. fiscal policy has no effect on the labor force participation rate. b. lower tax rates can lower the labor force participation rate. c. less generous transfer payments can raise the labor force participation rate. d. higher tax rates can raise the labor force participation rate. e. None of the above
Externalities are costs to society, which have an impact on parties not directly involved into a particular economic transaction.
Answer the following statement true (T) or false (F)