Question 1

​The ways to address agency costs include all EXCEPT

Accepted Answer

A) ​running background checks on prospective employees 
B) requiring employees to punch time clocks 
C) spot checks of the quality of employee's work 
D) ​providing better coffee machines in the lunch room 
A) ​running background checks on prospective employees 
B) requiring employees to punch time clocks 
C) spot checks of the quality of employee's work 
D) ​providing better coffee machines in the lunch room

Question 2

​Which of the following is true?

Accepted Answer

A) ​Decision making should never be centralized 
B) If you decide to centralize the decision making authority,figure out a way to keep information hidden from it 
C) If you decide to centralize the decision making authority,figure out a way to transfer information to the third party 
D) ​If you decide to centralize the decision making authority,figure out a way to transfer information to the decision maker 
A) ​Decision making should never be centralized 
B) If you decide to centralize the decision making authority,figure out a way to keep information hidden from it 
C) If you decide to centralize the decision making authority,figure out a way to transfer information to the third party 
D) ​If you decide to centralize the decision making authority,figure out a way to transfer information to the decision maker

Question 3

​The reason that a salaried salesman is not working diligently in making high margin sales for the principal could be

Accepted Answer

A) ​Adverse selection 
B) Moral hazard 
C) All of the above 
D) ​None of the above 
A) ​Adverse selection 
B) Moral hazard 
C) All of the above 
D) ​None of the above

Question 4

​A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and decides to pay them per location opened.The company should expect to see

Accepted Answer

A) ​A large number of badly selected stores 
B) A large number of well selected stores 
C) A small number of well selected stores 
D) ​A small number of badly selected stores 
A) ​A large number of badly selected stores 
B) A large number of well selected stores 
C) A small number of well selected stores 
D) ​A small number of badly selected stores

Question 5

​Smartphones at Work
In most departments,Macy's clerks are paid an hourly rate.As a consequence,they would prefer to spend the time goofing off than helping customers.The store developed a number of policies to combat this preference.For example,supervisors roam the store breaking up congregations of employees who are gossiping.However,with the advent of smartphones,employees can pass the time surfing the web,playing games,or posting to social media.How can Macy's alter compensation so as to combat this new form of shirking?

Accepted Answer

Macy's could convert more positions from

Question 6

​Which of the following is true?

Accepted Answer

A) ​Incentive compensation imposes no risks on the agents and thus should not affect their compensation 
B) Incentive compensation imposes risk on the agent but need not be compensated for 
C) Incentive compensation imposes risk on the agent for which they should be compensated 
D) ​Incentive compensation is a bad idea 
A) ​Incentive compensation imposes no risks on the agents and thus should not affect their compensation 
B) Incentive compensation imposes risk on the agent but need not be compensated for 
C) Incentive compensation imposes risk on the agent for which they should be compensated 
D) ​Incentive compensation is a bad idea

Question 7

​An incentive conflict is when

Accepted Answer

A) ​The agent and the principal have identical incentives 
B) The agent has different incentives than does the principal 
C) The agent and the principal neither have any incentives to work hard 
D) ​None of the above 
A) ​The agent and the principal have identical incentives 
B) The agent has different incentives than does the principal 
C) The agent and the principal neither have any incentives to work hard 
D) ​None of the above

Question 8

​If a car salesman is paid a commission on the sale value of the car,the owner is most likely to see

Accepted Answer

A) ​Large margins on sales 
B) Low margins on sales 
C) No sales 
D) ​None of the above 
A) ​Large margins on sales 
B) Low margins on sales 
C) No sales 
D) ​None of the above

Question 9

​The ways to address agency costs include all EXCEPT

Accepted Answer

A) ​running background checks on prospective employees 
B) requiring employees to punch time clocks 
C) instituting longer work days 
D) ​replacing closed offices with cubical office spaces 
A) ​running background checks on prospective employees 
B) requiring employees to punch time clocks 
C) instituting longer work days 
D) ​replacing closed offices with cubical office spaces

Question 10

​Moral hazard is a

Accepted Answer

A) ​Pre-contractual problem 
B) Post contractual problem 
C) Post firing problem 
D) ​None of the above 
A) ​Pre-contractual problem 
B) Post contractual problem 
C) Post firing problem 
D) ​None of the above

Question 11

​An incentive compensation scheme includes

Accepted Answer

A) ​a performance evaluation system 
B) a disciplinary action committee 
C) a reward system linked to performance 
D) ​Both A&C 
A) ​a performance evaluation system 
B) a disciplinary action committee 
C) a reward system linked to performance 
D) ​Both A&C

Question 12

​If a car salesman is paid a fixed commission when he sells a car,the owner is most likely to see

Accepted Answer

A) ​Large margins on sales 
B) Low margins on sales 
C) No sales 
D) ​None of the above 
A) ​Large margins on sales 
B) Low margins on sales 
C) No sales 
D) ​None of the above

Question 13

​In a situation where an artist is selling his own work to the galleries,the agent is

Accepted Answer

A) ​The artist 
B) The gallery 
C) Both of the above 
D) ​None of the above 
A) ​The artist 
B) The gallery 
C) Both of the above 
D) ​None of the above

Question 14

​In organizational design issues,decision rights pertain to

Accepted Answer

A) ​the legal workplace related rights of employees 
B) the regulations governing how a potential customer chooses which product to purchase 
C) the set of decisions that go with a particular position within the firm 
D) ​who gets to decide from which place co-workers will order lunch 
A) ​the legal workplace related rights of employees 
B) the regulations governing how a potential customer chooses which product to purchase 
C) the set of decisions that go with a particular position within the firm 
D) ​who gets to decide from which place co-workers will order lunch

Question 15

​A consequence of an incentive contract for employees is that

Accepted Answer

A) ​employees must incur additional risk 
B) employee level risk is reduced 
C) employer level risk is reduced 
D) ​there are no risk related consequences 
A) ​employees must incur additional risk 
B) employee level risk is reduced 
C) employer level risk is reduced 
D) ​there are no risk related consequences

Question 16

​Which of the following addresses agency costs?

Accepted Answer

A) ​advertising for employee positions in as many outlets as possible 
B) hiring only from job fairs 
C) spot checks of the quality of employee work 
D) ​reducing the number of holidays 
A) ​advertising for employee positions in as many outlets as possible 
B) hiring only from job fairs 
C) spot checks of the quality of employee work 
D) ​reducing the number of holidays

Question 17

​An HVAC company is selling heating and cooling equipment.It has separate sales and marketing units.The marketing unit would want to

Accepted Answer

A) ​Price aggressively to ensure sales are made 
B) Price less aggressively to ensure that profitable sales are made 
C) Price at cost to maximize sales 
D) ​None of the above 
A) ​Price aggressively to ensure sales are made 
B) Price less aggressively to ensure that profitable sales are made 
C) Price at cost to maximize sales 
D) ​None of the above

Question 18

​By switching its sales agents to a sales neutral profit commission,the firm is trying to convince the agents

Accepted Answer

A) ​To not change their sales patterns,as it would not change their compensation 
B) Improve their compensation by pricing less aggressively 
C) Improve their compensation by pricing more aggressively (lowering prices) 
D) ​None of the above 
A) ​To not change their sales patterns,as it would not change their compensation 
B) Improve their compensation by pricing less aggressively 
C) Improve their compensation by pricing more aggressively (lowering prices) 
D) ​None of the above

Question 19

​A potential problem arises in principal-agent relationships

Accepted Answer

A) ​because the agents and the principals have identical goals 
B) because the principals may want to minimize his profits,while the agent may want to maximize them 
C) because the agents may have different goals from the principals 
D) ​the goals of principals and agents are irrelevant 
A) ​because the agents and the principals have identical goals 
B) because the principals may want to minimize his profits,while the agent may want to maximize them 
C) because the agents may have different goals from the principals 
D) ​the goals of principals and agents are irrelevant

Question 20

​The ways to address agency costs include all EXCEPT

Accepted Answer

A) ​advertising for employee positions in as many outlets as possible 
B) requiring employees to punch time clocks 
C) spot checks of the quality of employee work 
D) ​replacing closed offices with cubical office spaces 
A) ​advertising for employee positions in as many outlets as possible 
B) requiring employees to punch time clocks 
C) spot checks of the quality of employee work 
D) ​replacing closed offices with cubical office spaces

The ways to address agency costs include all EXCEPT

Which of the following is true?

The reason that a salaried salesman is not working diligently in making high margin sales for the principal could be

A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and decides to pay them per location opened.The company should expect to see

Which of the following is true?

An incentive conflict is when

If a car salesman is paid a commission on the sale value of the car,the owner is most likely to see

The ways to address agency costs include all EXCEPT

Moral hazard is a

An incentive compensation scheme includes

If a car salesman is paid a fixed commission when he sells a car,the owner is most likely to see

In a situation where an artist is selling his own work to the galleries,the agent is

In organizational design issues,decision rights pertain to

A consequence of an incentive contract for employees is that

Which of the following addresses agency costs?

An HVAC company is selling heating and cooling equipment.It has separate sales and marketing units.The marketing unit would want to

By switching its sales agents to a sales neutral profit commission,the firm is trying to convince the agents

A potential problem arises in principal-agent relationships

The ways to address agency costs include all EXCEPT

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

Exam 19: Getting Employees to Work in the Firms Best Interest

​The ways to address agency costs include all EXCEPT

​Which of the following is true?

​The reason that a salaried salesman is not working diligently in making high margin sales for the principal could be

​A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and decides to pay them per location opened.The company should expect to see

​Which of the following is true?

​An incentive conflict is when

​If a car salesman is paid a commission on the sale value of the car,the owner is most likely to see

​The ways to address agency costs include all EXCEPT

​Moral hazard is a

​An incentive compensation scheme includes

​If a car salesman is paid a fixed commission when he sells a car,the owner is most likely to see

​In a situation where an artist is selling his own work to the galleries,the agent is

​In organizational design issues,decision rights pertain to

​A consequence of an incentive contract for employees is that

​Which of the following addresses agency costs?

​An HVAC company is selling heating and cooling equipment.It has separate sales and marketing units.The marketing unit would want to

​By switching its sales agents to a sales neutral profit commission,the firm is trying to convince the agents

​A potential problem arises in principal-agent relationships

​The ways to address agency costs include all EXCEPT

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

The ways to address agency costs include all EXCEPT

Which of the following is true?

The reason that a salaried salesman is not working diligently in making high margin sales for the principal could be

A payday loan company has decided to open several new locations in the city.To decide where to open these locations it hires consultants and decides to pay them per location opened.The company should expect to see

Which of the following is true?

An incentive conflict is when

If a car salesman is paid a commission on the sale value of the car,the owner is most likely to see

The ways to address agency costs include all EXCEPT

Moral hazard is a

An incentive compensation scheme includes

If a car salesman is paid a fixed commission when he sells a car,the owner is most likely to see

In a situation where an artist is selling his own work to the galleries,the agent is

In organizational design issues,decision rights pertain to

A consequence of an incentive contract for employees is that

Which of the following addresses agency costs?

An HVAC company is selling heating and cooling equipment.It has separate sales and marketing units.The marketing unit would want to

By switching its sales agents to a sales neutral profit commission,the firm is trying to convince the agents

A potential problem arises in principal-agent relationships

The ways to address agency costs include all EXCEPT