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Question
What is the term for the contract that maximizes the principal's payoff subject to the constraint that the principal lacks the agent's private information?a. First best.
b. Second best.
c. Third best.
d. Pareto optimum.
Answer
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Related questions
Q:
Consider two situations: In situation A the production of widgets is monopolized by a single firm. In situation B the production of widgets is perfectly competitive. In both situations the supply of labor to widget makers is infinitely elastic at a wage of w. In this case, the product a. will be the same in the two cases.
b. will be higher in case B than in case A.
c. will be higher in case A than in case B.
d. From the information given it is not possible to make a definite statement about the marginal value product of labor.
Q:
For a monopsonistic hirer of labor the gap between labor's marginal revenue product and its wage rate will be greater
a. the more elastic the supply curve for labor.
b. the more inelastic the supply curve for labor.
c. the more elastic the firm's demand for labor.
d. the more inelastic the firm's demand for labor.
Q:
Each firm in a cartel has an incentive to chisel because market price exceeds
a. marginal cost.
b. average cost.
c. average variable cost.
d. average fixed cost.
Q:
The Nash equilibrium in a Bertrand game in which firms produce perfect substitutes and have equal marginal costs is
a. efficient because all mutually beneficial transactions will occur.
b. efficient because of the free entry assumption.
c. inefficient because some mutually beneficial transactions will be foregone.
d. inefficient because of the uncertainties inherent in the game.
Q:
The Nash equilibrium of the Cournot game in which two identical firms face market demand and have costs is given by a. 50.0.
b. 41.7.
c. 31.5.
d. 27.8.
Q:
For the practice of price discrimination to be successful, the monopoly must
a. be able to prevent resale of its product.
b. face similar demand curves for various markets.
c. have similar costs among markets.
d. have a downward sloping marginal cost curve.
Q:
If a monopoly is maximizing profits
a. price will always be greater than average cost.
b. price will always equal marginal cost.
c. price will always be greater than marginal cost.
d. price will always equal marginal revenue.
Q:
The principal difference between economic profits for a monopolist and for a competitive firm is that
a. monopoly profits create major problems of equity whereas competitive profits do not.
b. competitive profits exist only in the short run whereas monopoly profits may exist in the long run as well.
c. monopoly profits represent a transfer out of consumer surplus whereas competitive profits do not.
d. monopoly profits are usually larger than competitive profits.
Q:
A monopoly's economic profits are represented by
a. (price minus marginal cost) times number of units sold.
b. (price minus average cost) times number of units sold.
c. (marginal revenue minus price) times number of units sold.
d. (marginal cost minus price) times number of units sold.
Q:
Suppose two individuals in an exchange economy have identical utility functions given by Person A has an endowment of x = 9 y = 8, person B has one of x = 16 y = 2. The price ratio that will prevail in equilibrium isa. px / py= 2.5.b. px/ py= 1.0.c. px/ py = 0.4.d. px/ py = 0.125.
Q:
Suppose that the two persons in an exchange economy (A and B) have utility functions given byAlong the contract curve, B's ratio of Y to X will bea. 2:1.b. 1:1.c. 1:2.d. between 1:1 and 1:2.
Q:
Each of the following factors might interfere with the efficiency of perfect competition except:
a. increasing returns to scale.
b. imperfect price information.
c. externalities.
d. diminishing returns to scale.
Q:
An allocation of resources is technically efficient if
a. it is impossible to increase the output of a particular good.
b. it is possible to increase the output of all goods.
c. it is impossible to increase the output of one good without cutting back on the production of something else.
d. it is possible to increase the output of one good.
Q:
When prices drop in response to a decline in demand for an increasing cost industry
a. producer surplus will increase but rents may decrease.
b. rent earned by elastically supplied inputs will decline by more than rent earned by inelastically supplied inputs.
c. rent earned by elastically supplied inputs will decline by less than rent earned by inelastically supplied inputs.
d. both producer surplus and rents will increase.
Q:
Suppose that the price elasticity of demand for a product is -1 and that the price elasticity of supply is +1. Assume also that the income elasticity of demand is +2. Then an increase in income of 10% will raise equilibrium price bya. 10%.b. 5%.c. 20%.d. an annual amount that cannot be determined.
Q:
If the market for bottled spring water is characterized by a very elastic supply curve and a very inelastic demand curve, an outward shift in the supply curve would be reflected primarily in the form of
a. higher prices.
b. higher output.
c. lower prices.
d. lower output.
Q:
A demand curve will shift out for any of the following reasons except
a. preference for a good increases.
b. price of a substitute falls.
c. income rises.
d. price of a complement falls.
Q:
A change in the distribution of income that leaves total income constant will not shift the market demand curve for a product providing
a. everyone has an income elasticity of demand of zero for the product.
b. everyone has the same income elasticity of demand for the product.
c. individuals have differing income elasticities for the product, but the average income elasticity for income gainers is equal to the average income elasticity for income losers.
d. any of these conditions occur.
Q:
An increase in the price of good x will be accompanied by
a. a shift in the market demand curve for good x.
b. a shift in the market demand curve for good y (a substitute for good x).
c. a movement along the market demand curve for good x.
d. a shift in the market demand curve for good y (a substitute for good x) and a movement along the market demand curve for good x.
Q:
If the firms in perfectly competitive industries each have a production function given by and the price elasticity of demand for the industry's output is -1, the wage elasticity of demand for labor by the industry will be
a. 0.
b. c. -1.
d. -2.
Q:
An input's marginal revenue product is given by
a. the input's marginal expense times marginal revenue.
b. the input's marginal expense times the input's marginal physical productivity.
c. marginal revenue times the number of units employed.
d. the input's marginal physical productivity times marginal revenue of the firm's output.
Q:
Which of the following conditions would result in the short run marginal cost curve not correctly reflecting the supply behavior of a profit-maximizing firm?
a. The firm is a price taker.
b. Price exceeds average total cost.
c. The elasticity of demand facing the firm is -3.
d. The firm can vary several inputs in the short run.
Q:
If the demand faced by a firm is inelastic, selling one more unit of output will
a. increase revenues.
b. decrease revenues.
c. keep revenues constant.
d. increase profits.
Q:
Graphically, the average productivity of labor is illustrated by
a. the slope of the total product curve at the relevant point.
b. the slope of the marginal productivity curve at the relevant point.
c. the negative of the slope of the marginal productivity curve at the relevant point.
d. the slope of the chord connecting the origin with the relevant point on the total output curve.
Q:
The average productivity of labor reaches its maximum
a. at the point of inflection of the total product curve.
b. where the slope of the total product curve is steepest.
c. where the slope of the total product curve is zero.
d. where marginal and average productivity are equal.
Q:
If preferences are onedimensional and preferences are single peaked, majority rule will result in selection of the project most favored by
a. no one.
b. the median voter.
c. the average voter.
d. everyone.
Q:
An individual will never buy complete insurance if
a. he or she is risk averse.
b. insurance premiums are unfair.
c. he or she is a risk taker.
d. insurance premiums are fair.
Q:
Efficient production of a public good requires
a. that individuals pay for such goods according to benefits received.
b. that each individual's MRS be equal to the RPT of public goods for private goods.
c. that the sum of individuals' MRSs be equal to the RPT of public goods for private goods.
d. that governments produce at the low point of the average cost curve for the public good.
Q:
If bargaining is costless, the assignment of property rights for an externality
a. has no impact on the possibility of an efficient outcome and no distributional impact.
b. has no impact on the possibility of an efficient outcome but does have a distributional impact.
c. does have an impact on the possibility of an efficient outcome but has no distributional impact.
d. does have an impact on the possibility of an efficient outcome and does have a distributional impact.
Q:
Externalities between two firms can be "internalized" if:I. The two firms merge.II. Bargaining costs are zero.III. The externalities affect each firm equally.IV. Marginal costs for both firms are constant.Which statement(s) correctly complete the sentence?a. Only II.b. All except III.c. I and II, but not III and IV.d. I and IV, but not II and III.