If a local fishing club spends time each year cleaning up local ...

[Davideckstein7]

If a local fishing club spends time each year cleaning up local streams by removing trash thrown by motorists, efficiency would be improved if
 
  A) motorists were fined and fishing club activities were taxed.
  B) the fishing club's activities were subsidized.
  C) the fishing club was taxed.
  D) motorists were subsidized.

Question 2

Most college professors are granted tenure after six years of employment. Tenure implies a lifetime appointment. What problem does this situation create, and how can colleges minimize the problem?
 
  What will be an ideal response?

[peilian]

Answer to Question 1

B

Answer to Question 2

Receiving a lifetime appointment creates a moral hazard. Knowing that one cannot be fired creates an incentive to shirk work. Colleges minimize the problem by looking for signals such as publications and an ongoing commitment to one's discipline during the six year probation period with the belief that those who work hard for these six years are also likely to work hard throughout the future.

[Davideckstein7]

Correct answers!

[peilian]

Great! Please up vote