If All Issues of Effort,output,and Pay Are Fully Observable and Contactable

question 18

Multiple Choice

If all issues of effort,output,and pay are fully observable and contactable between an owner and an employee,then:

• A)incentive conflicts can be eliminated.
• B)incentive conflicts remain intractable.
• C)the utility of the employee is unimportant to the outcome.
• D)revenues of the firm are independent of employee effort.

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Definitions:

Monopoly Power

The ability of a single producer or seller in a market to control prices and exclude competition, often leading to less choice and higher prices for consumers.

Cartels

An agreement among competing firms to control prices or exclude entry of a new competitor in a market, often to maximize profits collectively.

Secret Price Concessions

Secret price concessions involve undisclosed discounts or benefits offered by a seller to a buyer, often to secure a deal or foster loyalty without publicly affecting the listed price.

Business-Cycle Stability

The condition of an economy experiencing minimal fluctuations in growth, unemployment, and inflation, resulting in a stable economic environment.