What causes employers or employees to behave opportunistically?
Incompleteness of contracts give both the employer and the employee potential incentives
to act opportunistically, because each knows it will cost the other to form a new relationship that replaces their current one. In reality, however, employment often lasts for decades. Although unwritten, an employment contract can be enforced by the employer's reputation.
You might also like to view...
Refer to Figure 12-2. What is the amount of profit if the firm produces Q2 units?
A) It is equal to the vertical distance c to g multiplied by Q2 units. B) It is equal to the vertical distance g to Q2. C) It is equal to the vertical distance c to Q2. D) It is equal to the vertical distance c to g.
The feedback effect can be thought of as a type of
A) social regulation. B) economic regulation. C) creative response, which reduces the law's effectiveness. D) regulatory lag.
The benefit of a subsidy will go primarily to buyers when the
a. demand for the product is highly inelastic and supply is relatively elastic. b. demand for the product is highly elastic and the supply is relatively inelastic. c. subsidy is legally (statutorily) granted to the seller of the product. d. subsidy is legally (statutorily) granted to the buyer of the product.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.