The abnormal net income model
A) assumes that economic profits cannot be earned in the short run.
B) assumes that economic profits cannot be earned in the long run.
C) employs economic profit in its valuation of a firm.
D) none of these choices.
QUESTION 2The existence of differences between the average earnings of men and women:
a. proves the existence of discrimination.
b. may be partially due to factors other than wage discrimination.
c. proves that men on average invest more in human capital than do women.
d. indicates that men are on average smarter than women are.
QUESTION 3If an individual invests 20 in a bank deposit promising an interest of 12 percent per annum, compounded annually, he will receive 40 after 8 years.
Indicate whether the statement is true or false
QUESTION 4The present value of the future is
A) not related to the interest rate.
B) inversely related to the interest rate.
C) positively related to the interest rate.
D) equal to economic profit
QUESTION 5From a purely economic point of view, discrimination is established if:
a. black teenagers earn more than white teenagers do.
b. all factors are earning an amount equivalent to their marginal revenue product.
c. women earn less than men do.
d. equivalent factors earn different payments for equal contributions to output.
QUESTION 6Explain how compensation plans like piece rate payment, capitation fees, and hourly payment options resolve the principal/agent problem faced by employers.
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