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Author Question: Which of the following gives rise to a positive externality? A) Sudden increase in the price of ... (Read 20 times)

AEWBW

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on: Jun 29, 2018
Which of the following gives rise to a positive externality?
 
  A) Sudden increase in the price of oil due to a supply shock
  B) Sudden increase in the demand for diamonds leading to an increase in their price
  C) Deforestation leading to the extinction of many species
  D) Consumption of a drug to cure a communicable disease

Question 2

Explain the principal-agent relationshi
 
  What will be an ideal response?


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emsimon14

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Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

In a principal-agent relationship, the principal designs a contract specifying the payments to the agent as a function of his or her performance, and the agent takes an action that influences performance and thus the payoff of the principal.


AEWBW

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Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

kswal303

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Reply 3 on: Yesterday
Excellent

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