Author Question: With full information any contract will lead to production efficiency. Indicate whether the ... (Read 84 times)

silviawilliams41

  • Hero Member
  • *****
  • Posts: 560
With full information any contract will lead to production efficiency.
 
  Indicate whether the statement is true or false

Question 2

In the presence of asymmetric information, production efficiency is assured when the principal and agent share the profit.
 
  Indicate whether the statement is true or false


Andromeda18

  • Sr. Member
  • ****
  • Posts: 336
Answer to Question 1

False. A hire or revenue sharing contract will not provide the incentives for the agent to maximize joint profit.

Answer to Question 2

False. Since the agent faces full marginal cost but receives only a fraction of the marginal benefit, joint profit is not achieved.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Signs and symptoms that may signify an eye tumor include general blurred vision, bulging eye(s), double vision, a sensation of a foreign body in the eye(s), iris defects, limited ability to move the eyelid(s), limited ability to move the eye(s), pain or discomfort in or around the eyes or eyelids, red or pink eyes, white or cloud spots on the eye(s), colored spots on the eyelid(s), swelling around the eyes, swollen eyelid(s), and general vision loss.

Did you know?

Long-term mental and physical effects from substance abuse include: paranoia, psychosis, immune deficiencies, and organ damage.

Did you know?

Atropine, along with scopolamine and hyoscyamine, is found in the Datura stramonium plant, which gives hallucinogenic effects and is also known as locoweed.

Did you know?

It is believed that humans initially contracted crabs from gorillas about 3 million years ago from either sleeping in gorilla nests or eating the apes.

Did you know?

Fatal fungal infections may be able to resist newer antifungal drugs. Globally, fungal infections are often fatal due to the lack of access to multiple antifungals, which may be required to be utilized in combination. Single antifungals may not be enough to stop a fungal infection from causing the death of a patient.

For a complete list of videos, visit our video library