If an auto dealer wants to hire a salaried salesman but is afraid of facing the adverse selection problem, the principle can
a. Hire a salesman who has a reputation for working hard
b. Monitor the salesman to prevent shirking
c. All of the above
d. None of the above
b
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The product-variety externality arises in monopolistically competitive markets because
a. firms produce with excess capacity. b. firms try to differentiate their products. c. firms would like to produce homogeneous products, but the large number of firms prohibits it. d. entry and exit is restricted.
The practice of price discrimination is associated with pure monopoly because:
A. it can be practiced whenever a firm's demand curve is downsloping. B. monopolists have considerable ability to control output and price. C. monopolists usually realize economies of scale. D. most monopolists sell differentiated products.