Alex is hired as a sales agent and receives 10% commission on the sales price. The contract he signed is a A) fixed-fee contract. B) hire contract. C) contingent contract. D) sharing contract. ANSWER D
Date: September 9th, 2020
The demand curve is given by: QD = 5000 – 10 P Find equations for: a. Total revenue b. Marginal revenue ANSWER a. TR = P ∗ Q = (500 – 1/10 Q)Q = 500Q – 1/10 Q2 b. MR = 500 – 1/5Q
Date: September 9th, 2020
For each of the following sets of supply and demand curves, calculate equilibrium price and quantity. a. QD = 1000 – P; QS = P b. QD = 1500 – 2P; QS = 100 + 2P c. QD = 2000 – 3P; QS = -300 + 3P ANSWER a. Q = 500, P = […]
Date: September 9th, 2020
If the agent has more information than the principal and there is only one state of nature, then A) efficiency in both production and risk-bearing can be achieved. B) only efficiency in production can be achieved. C) only efficiency in risk-bearing can be achieved. D) neither efficiency in production nor efficiency in risk-bearing can be […]
Date: September 9th, 2020
To reduce moral hazard, a firm may A) pay workers at a piece rate. B) offer a year-end bonus if firm profits are up. C) offer stock options. D) All of the above. ANSWER D
Date: September 9th, 2020
For each of the following cost functions, if possible, find minimum AC and minimum AVC. a. TC = 40,000 + 20 Q b. TC = 1000 + 2Q + 0.1 Q2 ANSWER a. Set MC = AC. 20 = (40,000/Q) + 20 In this case, AC is decreasing everywhere, and thus there is no […]
Date: September 9th, 2020
Refer to the demand and supply equations. What are the equilibrium price and quantity? What will be an ideal response? ANSWER Bring similar terms on each side of the equation and solve for equilibrium price and quantity — quantities which make the amount supplied equal to demanded. 2P + 4 P = 80 + […]
Date: September 9th, 2020
Piece rates are practical when A) individual output can be easily measured. B) the quantity of the work is of much less importance than quality. C) both employees and employers engage in opportunistic behavior. D) All of the above. ANSWER A
Date: September 9th, 2020
Which of the following is NOT a difficulty with using a piece-rate contract? A) measuring output B) eliciting the desired behavior C) gaining worker acceptance D) workers taking too much time to achieve a certain task ANSWER D
Date: September 9th, 2020
Refer to the demand and supply equations. At a price of $35, there will be ________. Fill in the blank(s) with correct word ANSWER Qd = 80 – 2 (35 ) = 10 units Qs = – 10 + 4 (35 ) = 130 units Thus, at a price of $35 which is above […]
Date: September 9th, 2020
