38) Which of the following is most likely t A) The restaurant owner (principal)

Question

38) Which of the following is most likely t A) The restaurant owner (principal) pays the waiter to be a feature of a state-contingent contract? 38) agent) more when it is snowing or raining B) The agent makes the same wage regardless of demand. C) The agent pays the principal a higher licensing fee when demand demand is low is high commpared to when D) The agent, who lives in California or New York) than in-state sales. 39) If the price elasticity of demand for a good is greater than one in absolute value, economists characterize that demand is A) vertical B) elastic. C) perfect D) inelastic. 40) A firm sets its output where A) marginal revenue minus marginal cost equals zero (MR - MC-) B) marginal profit minus marginal cost equals zero (MP - MC- Q) marginal revenue minus marginal profit equals zero (MR-MP-o) D) None of the above. 41) Which of the following acts as a hostage for employees to behave well? A) bonding C) deferred payments B) efficiency wages D) All of the above. 42) B) hidden characteristics D) moral hazard. 42) Adverse selection is due to A) symmetric information. C) hidden actions. 43) 43) On any given day, a salesman can earn so with a 30% probability, S 100 with a 20% probability, or $300 with a 50% probability. His expected earnings equal D) $100. C) $170. B) $150 A) $0 44) 44) The key economic difference between expected utility and expected value is that A) expected utility only considers the value of outcomes, whereas expected value considers the tradeoff between value and risk. values from a set of possible outcomes tradeoff between value and risk. B) expected utility is the maximum value obtained, whereas expect value is the mean of the C) expected value only considers the value of outcomes, whereas expected utiity cosders the D) None of the above- the differences are mathematical not economic.

Explanation / Answer

38. The correct answer is C.

39. The correct answer is B.

40. The correct answer is A.

41. The correct answer is D.

42. The correct answer is B.

43. The correct answer is C.

44. The correct answer is C.

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