In the presence of asymmetric information, a fixed-fee contract
A) achieves production efficiency.
B) can lead to opportunistic behavior on the part of the agent.
C) is impossible to write.
D) will result in the principal earning all of the profit.
B
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If a firm is producing a quantity along the upward sloping portion of its marginal cost curve at which marginal cost exceeds price and is earning positive economic profits, it should
a. continue to produce this quantity. b. decrease the quantity produced because doing so will increase profit. c. increase the quantity produced because profits are still positive. d. wait for the price to increase to its current marginal cost.
When net capital flows are positive
A) net foreign investment is negative. B) capital inflows are greater than capital outflows. C) capital outflows are greater than capital inflows. D) A and B are both correct.
The economic behavior of government is constrained by
a. limited budgets b. the absence of prices on most government output c. moral philosophy of the community d. low voter participation rates e. political self interest
The wages of professional athletes
a. are related to demand for their services. b. include substantial economic rents. c. are high because of scarcity. d. All of the above are true.