In the presence of asymmetric information with costless monitoring and enforcement, a hire contract results in production efficiency
What will be an ideal response?
True. The agent has the incentive to shirk; however, since she can be monitored costlessly, she will not.
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Bid-rigging is more likely when
a. auctions are larger b. auctions are infrequent c. auctions generate different sets of potential bidders d. the auctioneer is paid a fixed fee rather than on commission
The bus company in Detroit found that when it reduced its price in order to get more people to use the bus—and more people did—the bus company's total revenue still remained the same. Why did they get this surprising result? a. The demand curve was horizontal, reflecting a price elasticity of zero. b. The demand curve was vertical, reflecting a price elasticity of zero. c. The demand curve
shifted to the right. d. The price elasticity within the range of price-before-the-cut and price-after-the-cut was unit elastic. e. The price cut was insufficient. A deeper cut would have increased total revenue.