The reason for the badness of performance compensation caps.

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Answer 1

Question

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

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Suppose the marginal social cost of television sets is $100. This is constant and equal to the average cost of television sets. The annual demand for television sets is given by the following equation: Q = 200,000-500P, where Qis the quantity sold per year and P is the price of television sets. a) If television sets are sold in a perfectly competitive market, calculate the annual number sold. Under what circumstances will the market equilibrium be efficient? b) Show the losses in well-being each year that would result from a law limiting sales of television sets to 100,000 per year. Show the effect on the price, marginal social benefit, and marginal social cost of television sets. Show the net loss in well-being that will result from a complete ban on the sales of television sets. (show with graphs.)

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Answer 2

Question

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

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Answer 3

Question

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

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Answer 4

Question

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

Answer 6

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.

Economics Concept Introduction

Compensation cap: Compensation cap refers to the maximum limit on the salary paid to the employees.

Answer 7

Chapter 1, Problem 1MC

To determine

The reason for the badness of performance compensation caps.

Answer 8

Expert Solution & Answer

Explanation of Solution

The compensation cap refers to the maximum limit on the salary paid. The compensation cap encourages the employees to be productive up to this limit; but it makes the employees less productive beyond the limit or cap value. This is because the employees will not receive any benefit after this limit. Therefore, the compensation cap will affect badly on the productivity of the economy. Thus, option ‘b’ is correct.