If Mark Uses the Door-In-The-Face Technique to Try to Convince

question 13

Multiple Choice

If Mark uses the door-in-the-face technique to try to convince his frugal wife Maria to buy a $25,000 sports car,what will he first propose

• A) That they purchase a $44,000 sports car.
• B) That they purchase a $25,000 sedan. 
• C) That they pay off all their debt first.
• D) That they take it for a test drive.

Understand the concepts of signaling and screening in economic contexts.

Recognize the principle-agent relationship in corporations and its implications.

Identify and explain adverse selection and moral hazard problems in various markets.

Understand how employers can mitigate moral hazard and adverse selection issues.