The utility possibility frontier helps to predict the exact bargain two parties will arrive at

Refer to Figure 4.3. All else equal, a decrease in the desire of households to consume today accompanied by an increase in corporate taxes would cause which of the following shifts?

A) S1 to S2 and D1 to D2 B) S2 to S1 and D1 to D2 C) S1 to S2 and D2 to D1 D) S2 to S1 and D2 to D1

Explain how compensation plans like piece rate payment, capitation fees, and hourly payment options resolve the principal/agent problem faced by employers