If Partners Are Paid Equal Shares and They Work Independently

question 67

Multiple Choice

If partners are paid equal shares and they work independently of each other:

• A)the last one to arrive has an incentive to shirk.
• B)the first one to arrive has an incentive to maximize output.
• C)each one has an incentive to maximize individual output.
• D)each one will increase individual utility by reducing output.

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Definitions:

British Pounds

The currency of the United Kingdom, used as a medium of exchange within the country and sometimes beyond.

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specific period.

Fair Hedge

A hedge that is accounted for at fair value, with changes in fair value recognized in earnings, to offset the exposure of an identified risk.