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3. Principal-agent relationships:

a. reduce monitoring costs

b. occur because managers have good informaiton about employees.

c. are not related to asymmetric information

d. are subject to moral hazard problems.

5. Princpal-agent problems:

a. occur when firm managers have more incentive to maximize profit than shareholder do.

b. would be reduced if firm owners had better information about the actions of the firm's managers.

c. help explain why equity investments from outside owners are an important finanicing source for firms.

d. are increased as more information is shard between the parties

6. In order to create an effective incentive compensation scheme, you must have

a.adequate performance measures

b. unlimited funds

c. a flat management structure

d. None of the above

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manhokwe tawanda
manhokwe tawandaLv10
23 Feb 2021
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Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

5. Princpal-agent problems:

a. occur when firm managers have more incentive to maximize profit than shareholder do.

b. would be reduced if firm owners had better information about the actions of the firm's managers.

c. help explain why equity investments from outside owners are an important finanicing source for firms.

d. are increased as more information is shard between the parties

Question 1

Which compensation method helps to explain the large difference between the salaries of top-level managers and mid-level managers in a firm?

A.

Tournaments
B.

New blood
C.

Piece rate
D.

Backloaded compensation

3 points

Question 2

Please consider the information provided under Question 19 in Chapter 3 (page 54). Based on the stated information, the optimal number of bees kept if the externality is ignored by Yung is 5,000. Is the socially optimal number of bees higher or lower than 5,000?

A.

We do not have enough information to answer this question
B.

Same
C.

Lower
D.

Higher

3 points

Question 3

Which of the following factors contribute to the existence of firms?

A.

All of these factors contribute to firm existence
B.

Risks associated with specialization
C.

Incomplete contracts
D.

Willingness of some people to take on risk in exchange for residual income

3 points

Question 4

Public goods are often subject to free-rider problems because these goods are:

A.

Non-rival and non-excludable
B.

Rival and non-excludable
C.

Non-rival and excludable
D.

Rival and excludable

3 points

Question 5

Which of the following is the most efficient mechanism for allocating scarce goods?

A.

Government allocation system
B.

First-come-first-served system
C.

Market system
D.

Random allocation system

3 points

Question 6

Many years ago, most of the major Hollywood movie studios also owned chains of local movie theaters across the US. Today, most of the local movie theaters are owned by other companies. What has happened to the degree of integration in the movie industry over time?

A.

Less horizontally integrated
B.

Less vertically integrated
C.

More horizontally integrated
D.

More vertically integrated

3 points

Question 7

Your firm produces replacement parts for the nuclear submarines operated by the US Navy. Which one of Porter's Five Forces will be most prominent in determining your strategies and profitability?

A.

Bargaining Power of Suppliers
B.

Bargaining Power of Customers
C.

Threat of New Entrants
D.

Threat of Substitutes

3 points

Question 8

Which of the following statements is NOT true?

A.

The market mechanism for allocating resources is most efficient due to the incentives it creates.
B.

Markets are always the most efficient way to allocate goods, even if the market is not perfectly competitive.
C.

The random allocation mechanism provides no incentives at all.
D.

The government allocation mechanism provides no incentive for the economy to grow.

3 points

Question 9

Suppose a firm's cost structure exhibits economies of scope. Which of the following actions is compatible with this cost structure?

A.

Diversify into other product lines
B.

Focus on core competencies and reduce production
C.

Focus on core competencies and maintain constant production
D.

Focus on core competencies and expand production

Question 10

Please refer to Table 8.3 on page 132 in the book. Suppose we change the payoffs in the "low price, low price" cell to 0, 25 from 0, 0. Does this change the Nash equilibrium for the game, and is the game still a Prisoner's Dilemma?

A.

Equilibrium changes, still a Prisoner's Dilemma
B.

Equilibrium changes, no longer a Prisoner's Dilemma
C.

Same equilibrium, no longer a Prisoner's Dilemma
D.

Same equilibrium, still a Prisoner's Dilemma

3 points

Question 11

Which of the following statements about restricting entry to markets is NOT true?

A.

Brand identity and logos are expensive to establish, and entrants may find it very expensive to establish comparable position in the market.
B.

Predatory pricing is illegal but very difficult to prove in court
C.

Branded products tend to have more elastic demand, which makes it more difficult for entrants to charge high prices and they must stay out of the market.
D.

A low-quality seller cannot effectively use a warranty program to keep other firms out of its market

3 points

Question 12

Your firm earns $2 million per quarter in total revenue, and your accounting profits are $100,000 per quarter. You do not charge the firm for the use of an old building that you own because it is 50 years old and fully depreciated. However, another firm has offered you $200,000 per quarter to use the facility, and this is the market rental rate for similar facilities. In this case, we know that your:

A.

Opportunity costs are positive and economic profits are negative
B.

Opportunity costs and economic profits are positive
C.

Opportunity costs are negative and economic profits are positive
D.

Opportunity costs and economic profits are negative

3 points

Question 13

Please refer to Question 13 in Chapter 1 (page 17). What is the marginal cost of reducing global warming by 0.017 degrees?

A.

MC = 60
B.

MC = 5
C.

We do not have enough information to answer this question
D.

MC = 50

3 points

Question 14

In Chapter 6, Boyes focuses on negative externalities such as the various types of pollution. However, as we discussed during our online session, we can also observe positive externalities in which external benefits are generated for people. Which of the following is NOT an example of a positive externality?

A.

Workers can help one another to "cover the phones" and make sure that someone is always available to help clients
B.

Workers can provide ideas to one another about how to solve problems
C.

All of these cases are examples of positive externalities
D.

Workers can form carpools and use other means to reduce commuting costs

3 points

Question 15

Common property resources are:

A.

Non-rival and non-excludable
B.

Non-rival and excludable
C.

Rival and non-excludable
D.

Rival and excludable

3 points

Question 16

The free-rider problem arises in markets for common property resources.

A.

False
B.

True

3 points

Question 17

Firms that set their product price below the actual cost of production may be engaging in:

A.

Predatory pricing
B.

Monopoly pricing
C.

Moral hazard
D.

Dollar-cost averaging

3 points

Question 18

Under a cap-and-trade mechanism to control air pollution, what happens to the price of pollution rights if the supply of righs is reduced (i.e., the supply of rights is reduced)?

A.

Increases
B.

Decreases
C.

No change

Question 19

The key method for a manufacturing firm to avoid hold-up problems is to have another source of inputs.

A.

False
B.

True

3 points

Question 20

Your firm sells luxury autos, and you have asked the marketing department to develop and stronger brand identity through a new ad campaign. After the campaign has run for 6 months, you hire an economic consultant to study the impact of the campaign on the demand for your autos. The consultant reports that the demand for your cars is now more elastic than it was 6 months ago. Was the new ad campaign successful?

A.

Yes
B.

No

""Please give answer with simple explaination""""Please give answer with simple explaination""""Please give answer with simple explaination""

1. In every society, choices must be made because resources are

a. Infinite, but economic want are finite

b. Finite, but economic wants are insatiable

c. Unlimited, but economic wants limited

d. Limited, and so are economic wants

2. Which question is an illustration of a microeconomic question

a. Is the quantity of wine purchased in one year dependent upon the price of wine?

b. Does government spending influence the total level of employment in the economy?

c. Is the purchasing power of the dollar higher or lower today than it was in 2000?

d. Is capitalism superior to socialism?

3. The purpose of the ceteris paribus assumption used in economic analysis is to :

a. Avoid making normative statements

b. A void the post hoc, ergo propter hoc fallacy

c. Make sure that all relevant factors are considered

d. Restrict the analysis to effect of a single economic factor

4. The profit motive is

a. Ineffective at producing consumer goods

b. Inherently beneficial to society if left alone to pursue its own self interests

c. Effective at producing goods when consumption is non-rival or non-excludable

d. Is often at odds with societies interests

5. In the system of central planning

a. There is repaid of the infrastructure

b. There is severe inflation in wholesale and retail prices

c. Economic growth leads to widespread unemployment among workers

d. The outputs of some industries become inputs for other industries

6. The market system communicates changes in supply and demand and elicits appropriate responses from businesses and resource suppliers. This is known as the:

a. Rationing function of prices

b. Guiding function of prices

c. Monetary function of prices

d. Circular flow of income

7. An increase in the quantity of automobiles supplied would be caused by which be caused by which of the following?

a. An increase in the demand for automobiles

b. A decrease in the demand for automobiles

c. Higher prices for steel

d. Higher prices for gasoline

8. All of the following would cause an increase in the demand for private airplanes at a given price, except a:

a. Decrease in interest rates

b. Increase in consumer incomes

c. Decrease in taxes on luxury goods

d. Decrease in the costs of constructing private airplanes

9. In modern economies of mass production,

a. Biological need motivates most consumption

b. The intrinsic value of goods and services motivates mass consumption

c. Affluence makes relative depravation meaningless

d. Invidious comparison motivates much of mass consumption

10. a more equal distribution of income in the United States would result in greater total consumer satisfaction. This statement is based on the concept that:

a. Income inequality is unfair

b. Income inequality is undemocratic

c. Income equality stimulates efficiency

d. Incomes are subject to diminishing marginal utility

11. While command systems suffer from incentive problems, market economies

a. Have no incentive problems

b. Suffer from incentive problems of their own

c. Tend to resolve all problems by their own dynamics

d. Have problems to the degree that there is government interference.

12. What economic concepts can be used to explain the reason that a new car purchased by a consumer and driven off a new car lot decrease in value almost immediately compared with the value of the same make and model of a car still on the new car lot?

a. Positive and negative externalities

b. Liability rules and lawsuits

c. The Coase theorem and moral hazard

d. Asymmetric information and adverse selection

13. Consider a situation where the U.S. Congress wants to place a special tax on private airplanes to increase tax revenue. This tax would only be effective in raising new tax revenues if the price elasticity of:

a. Supply is elastic

b. Supply is inelastic

c. Demand is elastic

d. Demand is inelastic

14. Under what circumstances would you expect economic profits to be zero in a particular industry?

a. During a recession

b. When there is little competition in the industry

c. When the industry is neither expanding nor contracting

d. When the demand for the product being produced is increasing

16. If economic resources are perfectly interchangeable between the two products shown on a production possibilities graph:

a. The economy will always be at full employment

b. More of one product can be produced without producing less fo the other product

c. The production possibilities curve would be straight line

d. The two products are of equal value to the economy

17. Opportunity cost is best defined as:

a. Marginal cost minis marginal benefit

b. The time spent on an economic activity

c. The value of the best foregone alternative

d. The money cost of an economic decision

18. All of the following would affect the position of a country production possibilities curve expect:

a. The quality of labor

b. The level of employment

c. The amount of the capital stock

d. Technological progress

19. The post hoc, ergo propter hoc fallacy consists of:

a. Using an example to a different point

b. Inferring causality from chronological sequence

c. Jumping to conclusions from an inadequate number of cases

d. Arguing for or against the person rather than the position being supported

20. Which is one of the five fundamental question that needs to be answered by economic system

a. What is the rate of unemployment?

b. Who will be the richest person in the economy?

c. What goods and services will be produced?

d. Why are the prices for goods and services so high?

21. The institution of private property is sustained over time by:

a. Competition

b. Bequests

c. Self-interest

d. Free enterprise

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