If the agent has more information than the principal and there is only one state of nature, then
A) efficiency in both production and risk-bearing can be achieved.
B) only efficiency in production can be achieved.
C) only efficiency in risk-bearing can be achieved.
D) neither efficiency in production nor efficiency in risk-bearing can be achieved.
A
Economics
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What are the three key features of the financial system that result from the existence of transactions and information costs?
What will be an ideal response?
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Which of the following functions is not performed by prices in a free market?
a. guiding the allocation of resources b. conveying information about the marginal cost of production c. making the distribution of income more equitable d. replacing the need for governmental supervision of production
Economics