Assume you are the owner of a delivery service company with a large fleet of trucks and drivers. Each of your drivers is allowed two thirty-minute breaks per day. However, some of them take longer breaks than your policy allows
You find out about this problem only by accident when you heard a couple of employees discussing during a morning coffee break. What kind of a problem is this for you from an economic point of view and what methods might you employ to mitigate this problem?
This is a market failure. It is basically a case of imperfect information. The absence of full knowledge can lead to transactions that are ultimately disadvantageous. In the current case these employees are taking away from the productivity and profitability of the firm. One way to ameliorate this problem would be to have random checks of drivers or to have them call in regularly with their progress. This of course requires increased supervision costs.
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If the CPI at the end of last year was 100 and the CPI at the end of this year was 115, the inflation rate was
A) 1.5 percent. B) 15 percent. C) 100 percent. D) 115 percent.
If a country's private saving is 100 and government saving is -100, domestic private investment
A) must be 200. B) must be zero. C) is equal to the net amount the economy borrows from other countries. D) is equal to the net amount the economy lends to other countries.