An Incentive-Compatible Revelation Mechanism Is

question 6

Multiple Choice

An incentive-compatible revelation mechanism is

• A)self-enforcing
• B)always multi-period
• C)too complicated to influence decisions
• D)prevalent in vertically integrated businesses
• E)not adopted by franchise businesses

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Definitions:

Diminishing Returns

The principle stating that as more of a variable input is added to a fixed input, the additional output produced from each new unit of input eventually decreases.

Rocking Chairs

A type of furniture designed with curved bands attached to the bottom, allowing it to rock back and forth.

Production Function

A mathematical model or equation that describes the maximum output of a firm, industry, or entire economy for a given set of inputs.

Labor Input

The amount of work effort, measured in hours or workforce size, used in the production of goods and services.