In the economic literature on principal-agent problems, the ________ is the person who takes some action, and the ________ is the person whom the action affects. A) agent, principal B) principal, agent C) Both statements describe the agent. D) Both statements describe the principal. ANSWER A
If, in the game in Scenario 13.14, R moves first, it will select A) Q = 50. B) Q = 100. C) Q = 150. D) a mixed strategy over the three choices that includes some positive likelihood for each Q. E) a mixed strategy over the choices Q = 50 and Q = 100. […]
Discrimination has no impact on the total output of goods and services. Indicate whether the statement is true or false ANSWER F
Refer to Figure 8.2. As the firm makes its long-run adjustment, which must be true? A) It takes advantage of increasing returns to scale. B) It suffers from decreasing returns to scale. C) It takes advantage of increasing marginal product. D) It takes advantage of economies of scale. E) It takes advantage of diseconomies of […]
Suppose Bob owns two factories that are located several hundred miles apart. Bob decides to manage one of the plants himself, and he hires another person to manage the second plant. For purposes of operating the second plant, who is the agent and who is principal? A) Bob is the agent and the manager is […]
Refer to Figure 8.2. If the firm expects $80 to be the long-run price, how many units of output will it plan to produce in the long run? A) 22 B) 34 C) 38 D) 50 E) 64 ANSWER E
Roaring Lion Studios can produce DVDs at a constant marginal cost of $5 per disk, and the studio has just releasing the DVD for its latest hit film, Ernest Goes to the Hamptons. The retail price of the DVD is $25, and the elasticity of demand for this film is -2. Has the studio selected […]
Whites feel as strongly as blacks that discrimination persists. Indicate whether the statement is true or false ANSWER F
If, in the game in Scenario 13.14, R moves first, C will respond with A) Q = 50. B) Q = 100. C) Q = 150. D) a mixed strategy over the three choices that includes some positive likelihood for each Q. E) a mixed strategy over the choices Q = 50 and Q = […]
DVDs can be produced at a constant marginal cost of $5 per disk, and Roaring Lion Studios is releasing the DVDs for its last two major films. The DVD for Rambeau 17 is priced at $20 per disk, and the DVD for Schreck 10 is priced at $30 per disk. What are the price elasticities […]