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The principal-agent model's prediction that higher stakes (greater incentives) will lead to higher effort is driven by -
A) The agent's general dislike of work
B) The assumption that the marginal cost of effort is increasing
C) The agent's aversion toward income risk
D) The agent's ambition
Multiple choice. Pls provide explanation
Suppose that a public accounting firm plans to hire some accountants for tax season. What will happen to the marginal product of labor as the firm hires more and more accountants?
Under the first plan he pays $0.25 per minute of connect time. Under the second plan, he pays a lump sum of $30 per month and only $0.10 per minute of connect time. Determine David's optimal consumption bundle and his choice between the two plans.
How much do you have to pay for a bond rate that pays 6% dividend compounded semi annually, with a face value of $5,000 that is going to be paid (maturity) in 5 years. The buyer wants to have an interest rate profit of 8% compounded semi annually.
Is there a relationship between age and interest in music education?
Analyze the situations involving risk below to determine if they involve Moral Hazard (M), Adverse Selection (A), or the Principal-Agent Problem (P). For Moral Hazard write “M” in the blank.
During an outbreak of disease there is a test that can identify the disease early, saving $10,000 in treatment costs per case identified. This test identifies the disease 70% of the time in those infected and costs $500 per test. Another, more expens..
Suppose a monopolist produces according to the following demand curve: P = 200 - 4 Q. Assume that the firm faces a constant marginal cost and constant average total cost of $56 per unit produced. What quantity should this firm produce? What price sho..
Supply and Demand: Suppose a survey shows an increase in illicit drug use by young people in the US. In the ensuing debate, two hypotheses for the increase are proposed: Hypothesis: Reduced police efforts have increased the availability of drugs on t..
A consumer has preferences u(x) = 2x 1 2 1 + x2. The price of good 1 is p1 > 0 and the price of good 2 is 1. You may restrict your attention to interior solutions throughout. Explain whether these preferences are i) monotonic, ii) quasilinear, iii) e..
1. What are some common ethical issues that result from the use of information technology?
Discuss whether there should be a different standard of behavior in the workplace compared to personal relationships. Analyze and evaluate the various issues presented while arguing and debating the connections between business, law, politics, and et..
In the country of Albion, expected inflation is 8% and the real interest rate is 5%, what is the nominal interest rate? Show your work.
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