The manager of Fatty Foods is thinking about retiring. He has two options: to leave his stores as a company stores, to be managed by a salaried manager, or to sell some of them as franchises. He however has no way of monitoring the salaried managers' activities. What would be his best bet?
a. Let the stores stay company stores
b. Sell them off as franchises
c. Shut down the business completely
d. Never retire
Question 2
Assume mortgages and houses are complements in consumption; if the price of mortgages decreases (decreases in interest rates), we would expect to see
a. An increase in demand for houses
b. An decrease in demand for houses
c. An increase in the quantity of houses demanded
d. An decrease in the quantity of houses demanded
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