Tying the salaries of top managers to the firm's stock price or to the profitability of the firm allows a firm's board of directors to
A) avoid disclosing financial statements to investors.
B) eliminate moral hazard.
C) increase asymmetric information.
D) reduce the principal-agent problem.
D
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Students can rent a Blu-ray movie at Campus Video for $4. As the price of Blu-ray players fall, the
A) quantity supplied of Blu-ray movies will decrease. B) demand for Blu-ray movies will increase. C) supply of Blu-ray movies will decrease. D) quantity demanded of Blu-ray movies will increase.
Ben's Peanut Shoppe suffers a short-run loss. Ben will not choose to shut down if
A) his Shoppe's total revenue exceeds his capital costs. B) his Shoppe's total revenue exceeds his implicit costs. C) his Shoppe's total revenue exceeds his fixed cost. D) his Shoppe's total revenue exceeds his variable cost.