Econ Final Exam

16. Match the following terms and definitions: A. This occurs when some action taken by one party to an exchange is not known or cannot be verified by the other. For example, the employer cannot know (or cannot verify) how hard the worker she has employed is actually working. B. This term originated in the insurance industry to express the problem that insurers face, namely, the person with home insurance may take less care to avoid fires or other damages to his home, thereby increasing the risk above what it would be in absence of insurance. This term now refers to any situation in which one party to an interaction is deciding on an action that affects the profits or wellbeing of the other but which the affected party cannot control by means of a contract, often because the affected party does not have adequate information on the action. C. The problem faced by parties to an exchange in which the terms offered by one party will cause some exchange partners to drop out. An example is the problem of asymmetric information in insurance: if the price is sufficiently high, the only people who will seek to purchase medical insurance are people who know they are ill (but the insurer does not). This will lead to further price increases to cover costs. D. This occurs when some attribute of the person engaging in an exchange (or the product or service being provided) is not known to the other parties. An example is that the individual purchasing health insurance knows her own health status, but the insurance company does not. 1. hidden actions 2. moral hazard 3. hidden attributes 4. adverse selection

1.A 2.B 3.D 4.C

22. Match the following terms and definitions: A. The economic rent that arises when a market is not in equilibrium, for example when there is excess demand or excess supply in a market for some good or service. B. Profits in excess of the opportunity cost of capital that an innovator gets by introducing a new technology, organizational form, or marketing strategy. C. Produced by the workings of a model rather than coming from outside the model. D. Coming from outside the model rather than being produced by the workings of the model itself. 1. disequilibrium rent 2. innovation rents 3. exogenous 4. endogenous

1.A 2.B 3.D 4.C

54. Match the following terms and definitions: A. A contract that does not specify, in an enforceable way, every aspect of the exchange that affects the interests of parties to the exchange (or of others). B. The economic rent a worker receives when the net value of her job exceeds the net value of her next best alternative (that is, being unemployed). Also known as: cost of job loss. C. Information that is relevant to the parties in an economic interaction, but is known by some but not by others. See also: adverse selection, moral hazard. D. What an employee would get in alternative employment, or from an unemployment benefit or other support, were he or she not employed in his or her current job. 1. Incomplete contract 2. Employment rent 3. Reservation wage 4. Asymmetric information

1.A 2.B 3.D 4.C

10. Match the following terms and definitions: A. Public expenditure in the form of free or subsidized services for households rather than in the form of cash transfers. B. An expenditure or transfer that increases the incomes of poorer households by more than richer households, in percentage terms. C. A set of government policies designed to provide improvements in the welfare of citizens by assisting with income smoothing (for example, unemployment benefits and pensions). D. Expenditure by the government, financed by taxation, which provides protection against various economic risks (for example, loss of income due to sickness, or unemployment) and enables people to smooth incomes throughout their lifetime. 1. In-kind transfers 2. Welfare state 3. Social insurance 4. Progressive policy

1.A 2.C 3.D 4.B

15. Match the following terms and definitions: A. A good for which use by one person does not reduce its availability to others. B. A rival good that one cannot prevent others from enjoying. C. A public good that it is possible to exclude some people from enjoying. D. A good that is both rival, and from which others can be excluded. 1. public good 2. artificially scarce good 3. private good 4. common-pool resource

1.A 2.C 3.D 4.B

30. Match the terms and definitions: A. At this price there is no excess supply or excess demand. B. Characteristic of producers and consumers who cannot benefit by offering or asking any price other than the market price in the equilibrium of a competitive market. They have no power to influence the market price. C. A model outcome that is self-perpetuating. In this case, something of interest does not change unless an outside or external force is introduced that alters the model's description of the situation. D. A market outcome in which all buyers and sellers are price-takers, and at the prevailing market price, the quantity supplied is equal to the quantity demanded. 1. market-clearing price 2. equilibrium 3. competitive equilibrium 4. price-taker

1.A 2.C 3.D 4.B

29. Match the terms and definitions: A. An indicator of how much a person values a good, measured by the maximum amount he or she would pay to acquire a unit of the good. B. The reservation price of a potential seller, who will be willing to sell a unit only for a price at least this high. C. The lowest price at which someone is willing to sell a good (keeping the good is the potential seller's reservation option). 1. willingness to accept (WTA) 2. willingness to pay (WTP) 3. reservation price

1.B 2.A 3.C

12. Match the following terms and definitions: A. In the ultimatum game, the smallest offer by the Proposer that will not be rejected by the Responder. Generally applied in bargaining situations to mean the least favorable offer that would be accepted. B. Costs that impede the bargaining process or the agreement of a contract. They include costs of acquiring information about the good to be traded, and costs of enforcing a contract. C. A person's next best alternative among all options in a particular transaction. 1. transaction costs 2. reservation option 3. minimum acceptable offer

1.B 2.C 3.A

26. Match the following terms and definitions: A. An equilibrium such that, if a shock disturbs the equilibrium, there is a subsequent tendency to move even further away from the equilibrium. B. A process whereby some initial change sets in motion a process that magnifies the initial change. C. A process whereby some initial change sets in motion a process that dampens the initial change. D. An equilibrium in which there is a tendency for the equilibrium to be restored after it is disturbed by a small shock. 1. positive feedback 2. negative feedback 3. stable equilibrium 4. unstable equilibrium

1.B 2.C 3.D 4.A

11. Match the following terms and definitions: A. A positive or negative effect of a production, consumption, or other economic decision on another person or people that is not specified as a benefit or liability in a contract. It is called an external effect because the effect in question is outside the contract. B. The cost of producing an additional unit of a good, taking into account both the cost for the producer and the costs incurred by others affected by the good's production. Marginal social cost is the sum of the marginal private cost and the marginal external cost. C. When markets allocate resources in a Pareto-inefficient way. D. A negative external effect: that is, the negative effect of production, consumption, or other economic decisions on another person or party, which is not specified as a liability in a contract. 1. market failure 2. external effect or externality 3. external cost 4. marginal social cost (MSC)

1.C 2.A 3.D 4.B

59. Match the following terms and definitions: A. The specialization of producers to carry out different tasks in the production process. B. A system in which producers are paid for the time they work for their employers. C. A business organization which pays wages and salaries to employ people, and purchases inputs, to produce and market goods and services with the intention of making a profit. D. Information that is relevant to the parties in an economic interaction, but is known by some but not by others. 1. Firm 2. Division of labor 3. Asymmetric information 4. Wage labor

1.C 2.A 3.D 4.B

25. Match the following definitions to the appropriate terms: A. Buying and selling assets in order to profit from an anticipated change in their price. B. A risk that only affects a small number of assets at one time. Traders can almost eliminate their exposure to such risks by holding a diverse portfolio of assets affected by different risks. C. A risk that affects all assets in the market, so that it is not possible for investors to reduce their exposure to the risk by holding a combination of different assets. D. A risk that threatens the financial system itself. 1. systematic risk 2. idiosyncratic risk 3. systemic risk 4. speculation

1.C 2.B 3.D 4.A

43. Match the following terms and definitions. A. The difference between the price and the marginal cost. B. A product produced by a single firm that has some unique characteristics compared to similar products of other firms. C. The effect on total cost of producing one additional unit of output. It corresponds to the slope of the total cost function at each point. D. A firm's revenue minus its total costs (including the opportunity cost of capital). 1. marginal cost 2. differentiated product 3. economic profit 4. profit margin

1.C 2.B 3.D 4.A

24. Match the definition to the following financial terms: A. A part of the assets of a firm that may be traded. It gives the holder a right to receive a proportion of a firm's profit and to benefit when the firm's assets become more valuable. B. A type of financial asset for which the issuer promises to pay a given amount over time to the holder. C. A financial instrument issued by governments that promises to pay flows of money at specific intervals. D. Anything of value that is owned. 1. asset 2. government bond 3. bond 4. stock or share

1.D 2.C 3.B 4.A

51. If Mark is earning $22 an hour and his disutility of work is $5 per hour and he would receive unemployment benefits equal to $6 per hour, then his employment rent is $__________ per hour. (in whole dollars, no dollar sign)

11

28. The following diagram shows the consumer and producer surplus in the market for bread. Consider changes in the elasticities of the demand and supply curves. Assuming that the market equilibrium output and price are unchanged, which of the following statements is correct? A. A less elastic supply curve will lead to a larger producer surplus. B. A more elastic demand curve will lead to a smaller producer surplus. C. A less elastic demand curve will lead to a smaller consumer surplus. D. Consumer and producer surplus do not depend on the elasticities of the demand and supply curves. *See graph

A. A less elastic supply curve will lead to a larger producer surplus.

53. Figure 6.4 depicted Maria's best response curve when the expected duration of unemployment was 44 weeks. Which of the following statements is correct? (multiple correct) A. If the expected unemployment duration increased to 50 weeks, Maria's best response to a wage of $12 would be an effort level above 0.5. B. If the unemployment benefit was reduced, then Maria's reservation wage would be higher than $6. C. Over the range of wages shown in the figure, Maria would never exert the maximum possible effort per hour. D. Increasing effort from 0.5 to 0.6 requires a bigger wage increase than increasing effort from 0.8 to 0.9. *See graph

A. If the expected unemployment duration increased to 50 weeks, Maria's best response to a wage of $12 would be an effort level above 0.5. C. Over the range of wages shown in the figure, Maria would never exert the maximum possible effort per hour.

34. Which of the following events would contribute to economies of scale? (multiple correct) A. Large supermarkets being able to drive down the cost of purchasing milk as it increases its scale of business. B. The expansion of the workforce requiring extra layers of management for better performance monitoring. C. A merger of two firms leading to savings on the costs of HR, IT, and legal departments. D. The higher the number of users of Windows 10, the more likely it is that Microsoft will be able to achieve a higher sale of its operating system.

A. Large supermarkets being able to drive down the cost of purchasing milk as it increases its scale of business. C. A merger of two firms leading to savings on the costs of HR, IT, and legal departments. D. The higher the number of users of Windows 10, the more likely it is that Microsoft will be able to achieve a higher sale of its operating system.

40. A firm can earn positive profits so long as: A. Price is greater than average cost B. Price is greater than marginal cost C. Price is greater than total cost D. Marginal revenue = marginal cost

A. Price is greater than average cost

5. Which of the following statements regarding segmented labor markets are correct? A. The 'gig economy' is not part of the primary labor market. B. Workers in the secondary labor market are better paid than those in the primary labor market. C. Trade unions have attempted to reduce hours of work by introducing zero hours contracts. D. Primary labor market jobs are concentrated in agriculture.

A. The 'gig economy' is not part of the primary labor market.

20. Which of the following statements is correct according to Friedrich Hayek? A. The advantage of capitalism is that it provides the right information to the right people, mainly through prices. B. Perfect competition can be attained without activities such as advertising, undercutting, and improving ("differentiating") the goods or services produced. C. A single central authority can collate and make use of the information available in the economy better than the market. D. Prices convey the scarcity of a good under a centrally planned economy.

A. The advantage of capitalism is that it provides the right information to the right people, mainly through prices.

50. Which of the following are reasons why employment contracts are incomplete? (multiple correct) A. The firm cannot contract an employee not to leave. B. The firm cannot specify every eventuality in a contract. C. The firm is unable to observe exactly how an employee is fulfilling the contract. D. The contract is unfinished.

A. The firm cannot contract an employee not to leave. B. The firm cannot specify every eventuality in a contract. C. The firm is unable to observe exactly how an employee is fulfilling the contract.

48. The figure below depicts the effect of a change in the unemployment benefit on the workers' best response curve, when the unemployment rate is 12%. Which of the following statements is correct following a rise in the unemployment benefit? A. The firm's profit level falls. B. The workers' reservation wage falls. C. The wage curve shifts to the right. D. The firm sets a lower real wage. *See graph

A. The firm's profit level falls.

17. Large banks who take excess risk because they believe they will be bailed out by the government if they go bankrupt are often known as: A. Too big to fail B. Commercial banks C. Goldman Sachs D. Investment banks

A. Too big to fail

52. Which of the following are benefits to work and would be lost if an employee loses her job? (multiple correct) A. Wage income B. Firm-specific assets C. The disutility of work D. The social status of being employed

A. Wage income B. Firm-specific assets D. The social status of being employed

3. Figure 19.1 shows the inequality in wealth, earnings, and disposable income in the US, Sweden, and Japan using the Gini coefficient. Based on this information, which of the following statements are correct? A. Wealth is much more unequally distributed than earnings in all three countries. B. Sweden is an unambiguously more unequal society than Japan. C. Of the three countries, the US is the most unequal society. D. Sweden attains its relatively equal disposable income distribution through its system of taxes and transfers. *see graph

A. Wealth is much more unequally distributed than earnings in all three countries. D. Sweden attains its relatively equal disposable income distribution through its system of taxes and transfers.

55. The major difference between firms and markets is that firms are an entity in which there is a _____________ of power while markets are characterized by a _____________ of power. A. concentration; decentralization B. decentralization; concentration C. lack of; increase D. dispersal; focus

A. concentration; decentralization

58. One way to solve the principal-agent problem in the labor market is with a _______________ firm in which the firm is owned by the workers. A. cooperative B. privately owned C. franchise D. publicly owned

A. cooperative

31. If a competitive market is in equilibrium and there is an increase in supply due to an improvement in technology, then price will ________ and quantity will _________. A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease

A. decrease; increase

63. In the labor market, firms pay workers a wage _________ than their reservation wage in order to give them an incentive to provide more _____________. A. higher; effort B. equal to; time C. equal to; effort D. lower; effort

A. higher; effort

39. Firms facing a downward sloping demand curve will face a tradeoff when moving down the demand curve between selling __________ but receiving a ______________ price for each unit sold. A. more; lower B. more; higher C. less; lower D. less; higher

A. more; lower

45. Firms with more market power will have a higher ________, or the difference between the price and the marginal cost. A. profit margin B. average cost C. price D. fixed cost

A. profit margin

60. Employers may be against the government providing higher unemployment benefits because it will shift the workers' best response curve to the ________ and ________ the firms' profits. A. right; reduce B. right; increase C. left; increase D. left; reduce

A. right; reduce

1. Which of the following is likely to increase the Gini coefficient and income inequality? A. Higher unemployment benefits B. A "right to work" law that makes it harder to form unions. C. A higher minimum wage D. Increased membership in labor unions

B. A "right to work" law that makes it harder to form unions.

21. The following diagram depicts the competitive market for hats before and after a demand shift. Based on this information, which of the following statements is correct? A. In the adjustment process from E to the new market equilibrium F, the sellers behave as price-makers while the buyers remain price-takers. B. After the demand shift, the market initially moves from A to E, before settling to the new equilibrium at F. C. At E, lowering the price to $7 results in a Nash equilibrium for the buyers and sellers. D. At E, the sellers are on the short side of the market. *See graph

B. After the demand shift, the market initially moves from A to E, before settling to the new equilibrium at F.

7. Which of the following statements is correct regarding policies on inequality? A. Japan has a more equal society compared to the US due to its large equalizing effect of taxes and transfers. B. Providing high-quality education to citizens is a way of raising the endowments of less well off people. C. An increase in the minimum wage increases unemployment, leading to higher inequality unambiguously. D. Non-compete contracts mean that workers can demand higher wages, leading to reduced inequality.

B. Providing high-quality education to citizens is a way of raising the endowments of less well off people.

19. Which of the following statements is correct regarding bubbles? A. According to the efficient market hypothesis, bubbles occur when the market misprices the value of an asset. B. Some economists believe that bubbles do not exist. C. The market can easily know that it is in a bubble by comparing its market price with the fundamental value of the asset. D. For a bubble to occur the market participants must disagree about the fundamental value of the asset.

B. Some economists believe that bubbles do not exist.

33. The following diagram shows the market demand curve of Apple Cinnamon Cheerios, the isoprofit curves of the producer firm, and the firm's profit function curve. Based on the graph, which of the following statements are correct? (multiple correct) A. The highest profit that the firm can make is $60,000. B. The profit-maximizing choice for the firm is where the highest attainable isoprofit curve is tangent to the demand curve. C. The profit-maximising choice for the firm is where its marginal rate of substitution between the price charged and the quantity produced is equal to its marginal rate of transformation. D. The profit-maximizing choice for the firm is at the peak of its profit function curve. *See graph

B. The profit-maximizing choice for the firm is where the highest attainable isoprofit curve is tangent to the demand curve. C. The profit-maximising choice for the firm is where its marginal rate of substitution between the price charged and the quantity produced is equal to its marginal rate of transformation. D. The profit-maximizing choice for the firm is at the peak of its profit function curve.

61. Which of the following statements are correct regarding the difference between markets and firms? A. Transactions within firms operate as contracts. Market transactions are not contracts. B. Working in a firm involves accumulation of firm-specific assets that will be lost if the connection to the firm is severed. C. Markets involve a decentralization of power, while firms represent a concentration of economic power. D. It is possible to employ division of labour within firms, while it is not possible in markets.

B. Working in a firm involves accumulation of firm-specific assets that will be lost if the connection to the firm is severed. C. Markets involve a decentralization of power, while firms represent a concentration of economic power.

13. One solution to a market failure is for the government to impose _______________ so that a firm's marginal private cost is equal to the marginal social cost. A. clear property rights B. a Pigouvian tax C. a production ban D. a quota

B. a Pigouvian tax

32. If demand for a brand decreases because consumers' tastes change, then we would expect price to _______ and quantity to _________. A. increase; decrease B. decrease; decrease C. decrease; increase D. increase; increase

B. decrease; decrease

8. Global inequality, both between country averages and between all of the world's people, is very _________ but has been ___________ in recent decades. A. high; rising B. high; falling C. low; falling D. low; rising

B. high; falling

46. Even firms with a lot of market power cannot set prices as high as they want because as price _______, quantity _________, eventually leading to lower profits. A. decreases; stays the same B. increases; decreases C. decreases; decreases D. increases; increases

B. increases; decreases

57. In Figure 6-5 the profit at point A is __________ than the profit at point B because the firm has to pay _____________ for the same level of effort from its employees. A. higher; more B. lower; more C. higher; less D. lower; less *See graph

B. lower; more

49. Which of the following statements is true? A. A labour contract transfers ownership of the employee from the employee to the employer. B. The office where the employee works is a relation-specific asset, because the employee cannot use it after leaving the firm. C. In a labour contract, one side of the contract has the power to issue orders to the other side, but this power is absent from a sale contract. D. A firm is a structure that involves decentralization of power to the employees.

C. In a labour contract, one side of the contract has the power to issue orders to the other side, but this power is absent from a sale contract.

35. A firm's cost of production is £12 per unit of output. If P is the price of the output good and Q is the number of units produced, which of the following statements is correct? A. Point (Q, P) = (2,000, 20) is on the isoprofit curve representing the profit level £20,000. B. Point (Q, P) = (2,000, 20) is on a lower isoprofit curve than point (Q, P) = (1,200, 24). C. Points (Q, P) = (2,000, 20) and (4,000, 16) are on the same isoprofit curve. D. Point (Q, P) = (5,000, 12) is not on any isoprofit curve.

C. Points (Q, P) = (2,000, 20) and (4,000, 16) are on the same isoprofit curve.

27. The market demand curve of a particular good is downward-sloping. Based on this information, which of the following statements is correct regarding a price-taking firm producing that good? A. A price-taking firm cannot be profit-maximising. B. The firm chooses the price that equals its marginal cost. C. The firm chooses its output such that the marginal cost equals the price. D. The demand curve faced by the firm is downward-sloping.

C. The firm chooses its output such that the marginal cost equals the price.

47. Which of the following statements best describes the game played by the employer and the employee in the labour discipline model? A. The game is a simultaneous game where the employer chooses the wage level and the employee chooses the effort level simultaneously. B. The game is a one-off game where the wage and effort levels are determined once and for all. C. The worker selects the effort level that balances his desire to keep his job with his desire also to not exhaust himself on the job. D. The employer will attempt to maximise the firm's profit by offering a wage equal to the worker's reservation wage.

C. The worker selects the effort level that balances his desire to keep his job with his desire also to not exhaust himself on the job.

64. The labor discipline model implies that firm profits will be ___________ when the economy's unemployment rate is higher as they will have to pay workers _________ for a given level of effort. A. lower; more B. higher; more C. higher; less D. lower; less

C. higher; less

44. Firms with market power face a downward sloping demand curve and are generally are assumed to choose the quantity and price that will: A. maximize workers' salaries B. maximize economic efficiency C. maximize profit D. minimize negative externalities

C. maximize profit

23.In the long-run of a profitable market, both demand and supply elasticities tend to be ____________ as firms enter and exit the market and substitutes become available. A. the same B. more inelastic C. more elastic D. less elastic

C. more elastic

4. In Thomas Piketty's 'Economist in action' video, which of the following were NOT among the reasons that Piketty gave for the fall in the incomes of the very rich during the twentieth century? A. the First World War B. the Great Depression C. the Russian Revolution D. the Second World War

C. the Russian Revolution

2. According to the figure below, __________ of people born in the bottom 20% of the income distribution make it to the top 20% of the income distribution in the United States while __________ make the jump up in Denmark. A. 16.7%; 7.4% B. 9.8%; 16.1% C. 36%; 33.7% D. 7.4%; 16.7% *see graph

D. 7.4%; 16.7%

18. The following is an order book for News Corp shares. Consider the case where there is a limit buy order for 650 shares at $16.59, followed by a limit sell order for 600 shares at $16.55. Based on this information, which of the following statements is correct? A. After the two trades, the first buyer will have bought 500 shares at $16.59 and the remaining 150 shares at $16.55. B. The last traded price would be $16.56. C. The subsequent limit sell order will be filled with 400 shares at $16.56 and 200 shares at $16.55. D. After the initial limit buy order, there will be 150 shares at $16.59 on the bid side of the order book. *See graph

D. After the initial limit buy order, there will be 150 shares at $16.59 on the bid side of the order book.

14. Which of the following is NOT a cause of market failures? A. Missing markets B. Incomplete contracts C. Asymmetric information D. Complete property rights

D. Complete property rights

37. This figure shows the marginal cost and marginal revenue curves for Beautiful Cars. Which of the following statements is correct, based on the information shown? A. When Q = 40, the marginal cost is greater than the marginal revenue so the firm's profit must be negative. B. Revenue is greater when Q = 10 than if Q = 20. C. The firm would not choose to produce at point E because marginal profit is zero. D. Profit is greater when Q = 20 than when Q = 10. *See graph

D. Profit is greater when Q = 20 than when Q = 10.

36. Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. The quantity-price combination at point E is (Q*, P*) = (32, 5,440). The average cost of producing 50 cars is the same as the average cost of producing 32. Suppose that the firm keeps the price at P = $5,440 but now produces 50 cars instead of 32. Which of the following is correct? A. The firm will now sell all 50 cars at $5,440. B. The firm's profit will increase. C. The firm's profit remains the same. D. The firm's profit is now reduced. *See graph

D. The firm's profit is now reduced.

62. Which of the following statements is correct regarding involuntary unemployment? A. When a firm sacks a worker against her wishes but she can get another identical job immediately, there is involuntary unemployment. B. When there is involuntary unemployment the employment rent is zero. C. When there is no involuntary unemployment firms must be employing workers without ever dismissing them. D. There must be involuntary unemployment in an efficiency wage equilibrium because workers would be worse off if they lose their current job.

D. There must be involuntary unemployment in an efficiency wage equilibrium because workers would be worse off if they lose their current job.

6. According to our 'Economist in action' video of Arin Dube, which of the following was a finding of his study of the minimum wage increase? A. Increasing the minimum wage increased worker turnover. B. A 10% increase in minimum wage resulted in a 4% increase in earnings. C. A 10% increase in minimum wage resulted in a 4% decrease in employment. D. There was a minimal negative effect on employment.

D. There was a minimal negative effect on employment.

9. What is the term used to describe inequality between groups, such as by gender or race? A. 90/10 income ratio B. gini coefficient C. Income earned by top 1% D. categorical inequality

D. categorical inequality

56. The cost of job loss, or ______________, is the benefit to a worker of having his or her specific job compared to his or her next best alternative. A. wage B. unemployment benefits C. salary D. employment rent

D. employment rent

38. A firm with a higher price elasticity of demand will have a ___________ markup than a firm with a lower elasticity of demand. ____________ is one way to increase the price elasticity of demand in an industry. A. higher; Competition B. lower; Regulation C. higher; Regulation D. lower; Competition

D. lower; Competition

41. Firms maximize profit by setting ___________ equal to ___________. A. marginal revenue; price B. price; marginal cost C. marginal revenue; average cost D. marginal revenue; marginal cost

D. marginal revenue; marginal cost

42. In figure 7-5, the firm will produce at point E because it is the point that _________________. A. maximizes consumer utility B. maximizes revenue C. minimizes cost D. maximizes profit *See graph

D. maximizes profit

65. The optimal amount of work that a worker chooses to perform for each wage that the employer may offer is known as the: A. Reservation wage B. Principal-agent relationship C. Employment rent D. worker's best response function

D. worker's best response function