Marginal cost
a. Is the additional cost incurred by producing and selling one more unit
b. Is the total cost incurred by producing and selling one more unit
c. Is the additional fixed cost incurred by producing and selling one more unit
d. None of the above
QUESTION 2The following is NOT an example of a potential monitoring solution to moral hazard
a. a pre-hire typing test for clerical employees
b. closed circuit TVs throughout a warehouse
c. GPS tracking devices in repair trucks
d. listening in on call center conversations
QUESTION 3To keep employees from shirking, invest in greater monitoring
a. when monitoring is expensive relative to its benefits
b. especially when monitoring is not very efficient
c. when employees respond well to incentive contracts
d. when incentives fail to solve either moral hazard and adverse selection problems with employees
QUESTION 4Average cost is
a. Total variable cost divided by total units produced
b. Total fixed cost divided by total units produced
c. Total cost divided by total units produced
d. Equal to marginal cost
QUESTION 5To keep employees from shirking, invest in greater monitoring
a. when monitoring is expensive relative to its benefits
b. especially when monitoring is not very efficient
c. when employees fail to respond to incentive contracts
d. when incentives solve both moral hazard and adverse selection problems with employees
QUESTION 6With fixed costs of 200 . a firm has average total costs of 5 and average variable costs of 3 . Its output is:
a. 100 units.
b. 40 units.
c. 66.67 units.
d. Need more information
QUESTION 7To keep employees from shirking, invest in greater monitoring
a. when monitoring is expensive relative to its benefits
b. especially when monitoring is efficient
c. when employees respond well to incentive contracts
d. when incentives solve both moral hazard and adverse selection problems with employees
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