Question 1

​The problem the agent faces when deciding how to keep the agent motivated is called

Accepted Answer

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

Question 2

​Information gathering for an adverse selection happens

Accepted Answer

A) ​Before the agent is hired 
B) After the agent is hired 
C) After the agent is fired 
D) ​None of the above 
A) ​Before the agent is hired 
B) After the agent is hired 
C) After the agent is fired 
D) ​None of the above

Question 3

​Relative to a manager of a company owned store,a franchisee is more likely to

Accepted Answer

A) ​Work very hard 
B) Not work as hard 
C) Work only evenings 
D) ​Work only night shifts 
A) ​Work very hard 
B) Not work as hard 
C) Work only evenings 
D) ​Work only night shifts

Question 4

​Which of the following is a way to reduce agency costs?

Accepted Answer

A) ​Change the decision maker 
B) Transferring information to the decision maker 
C) Change the decision maker's incentives 
D) ​All of the above 
A) ​Change the decision maker 
B) Transferring information to the decision maker 
C) Change the decision maker's incentives 
D) ​All of the above

Question 5

​When decision rights are decentralized,typically

Accepted Answer

A) ​decisions are being moved to those with less of the relevant information 
B) decisions are being moved to those with stronger incentives to make good decisions 
C) decisions are being moved away from those with more of the relevant information 
D) ​decisions are being moved to those with weaker incentives to make good decisions 
A) ​decisions are being moved to those with less of the relevant information 
B) decisions are being moved to those with stronger incentives to make good decisions 
C) decisions are being moved away from those with more of the relevant information 
D) ​decisions are being moved to those with weaker incentives to make good decisions

Question 6

​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?

Accepted Answer

A) ​Let the stores stay company stores 
B) Sell them off as franchises 
C) Shut down the business completely 
D) ​Never retire 
A) ​Let the stores stay company stores 
B) Sell them off as franchises 
C) Shut down the business completely 
D) ​Never retire

Question 7

​To avoid employees "gaming" the system

Accepted Answer

A) ​Try to anticipate the more obvious games 
B) Adjust the compensation scheme to avoid the most obvious games 
C) Monitor outcomes to ensure that you are getting the behavior you desire 
D) ​All of the above 
A) ​Try to anticipate the more obvious games 
B) Adjust the compensation scheme to avoid the most obvious games 
C) Monitor outcomes to ensure that you are getting the behavior you desire 
D) ​All of the above

Question 8

​To solve the principle agency problem,which of the following questions should you ask

Accepted Answer

A) ​Who is making the bad decision? 
B) Does the decision maker have all the relevant information? 
C) Does the decision maker have the incentive to make the right decision? 
D) ​All of the above 
A) ​Who is making the bad decision? 
B) Does the decision maker have all the relevant information? 
C) Does the decision maker have the incentive to make the right decision? 
D) ​All of the above

Question 9

​Examples of incentive pay include

Accepted Answer

A) ​allowing employees a certain number of personal days 
B) providing onsite parking for employees 
C) bonuses for meeting deadlines 
D) ​offering a certain number of sick days 
A) ​allowing employees a certain number of personal days 
B) providing onsite parking for employees 
C) bonuses for meeting deadlines 
D) ​offering a certain number of sick days

Question 10

​Sharing contracts in franchising is when

Accepted Answer

A) ​The franchisor pays a fixed franchisor fee 
B) The franchisor pays a percentage of the revenue or profit of the restaurant 
C) The franchisor fee is decreased to 50% 
D) ​The franchise gets to share the franchise fee with other restaurants 
A) ​The franchisor pays a fixed franchisor fee 
B) The franchisor pays a percentage of the revenue or profit of the restaurant 
C) The franchisor fee is decreased to 50% 
D) ​The franchise gets to share the franchise fee with other restaurants

Question 11

Browsing on the Job
The Dunder-Miflin Paper Company has been suffering an even greater spate of shirking by the accounting staff ever since its employees got access to the Internet on their desktop computers.Why did this not affect the sales staff as much?​

Accepted Answer

The accountants are very likely salaried

Question 12

​Data Driven Decision Making
Kroger Groceries provides store managers flexibility to determine prices for a number of popular items they carry because demand is affected primarily by local conditions that managers are more aware of.To make sure managers use this discretion wisely,managers are rewarded with bonuses based on quarterly sales.With improvements in data collection and analysis,the "quants" in corporate headquarters can run many small experiments.Doing so allows them to understand nuanced patterns in consumer demand that had been un-noticed previously.How does this affect manager compensation?

Accepted Answer

The new ability to mine the data by the

Question 13

​A feasible solution to ensure that the sales agents are pricing the merchandise in the firm's best interest and not too aggressively is to

Accepted Answer

A) ​Never let them reduce the price 
B) Let them control the pricing decision independently 
C) Require the sales agents to obtain permission to reduce price below a specific threshold 
D) ​All of the above 
A) ​Never let them reduce the price 
B) Let them control the pricing decision independently 
C) Require the sales agents to obtain permission to reduce price below a specific threshold 
D) ​All of the above

Question 14

​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 pays them per store opened.At the end of the quarter,the company notices a many of the new stores' sales volume fail to meet expectations.To incentivize the consultants to instead focus on opening profitable stores,the company should have paid them

Accepted Answer

A) ​Per store opened 
B) A percentage of the profit earned per new store 
C) A fixed salary 
D) ​All of the above 
A) ​Per store opened 
B) A percentage of the profit earned per new store 
C) A fixed salary 
D) ​All of the above

Question 15

​Examples of incentive pay include

Accepted Answer

A) ​allowing employees a certain number of personal days 
B) royalties to textbook authors 
C) cleaning the worksite with weekly janitorial service 
D) ​offering a certain number of sick days 
A) ​allowing employees a certain number of personal days 
B) royalties to textbook authors 
C) cleaning the worksite with weekly janitorial service 
D) ​offering a certain number of sick days

Question 16

​An industrious franchisee will

Accepted Answer

A) ​Always be outbid by lazy ones for the right to run a franchised restaurant 
B) Always outbid the lazy ones for the right to run a franchised restaurant 
C) Never outbid the lazy ones for the right to run a franchised restaurant 
D) ​None of the above 
A) ​Always be outbid by lazy ones for the right to run a franchised restaurant 
B) Always outbid the lazy ones for the right to run a franchised restaurant 
C) Never outbid the lazy ones for the right to run a franchised restaurant 
D) ​None of the above

Question 17

​The owner of the local "Fatty Foods" chain of restaurants is thinking about retiring.He has two options: he can hire salaried managers for his stores or franchise them to local entrepreneurs.If the owner believes that there are high costs to monitoring the stores after he retires,what should he do?

Accepted Answer

A) ​Let the stores stay company stores 
B) Sell them off as franchises 
C) Shut down the business completely 
D) ​Never retire 
A) ​Let the stores stay company stores 
B) Sell them off as franchises 
C) Shut down the business completely 
D) ​Never retire

Question 18

​Potential problems with incentive based compensation are

Accepted Answer

A) ​not evaluating the relevant performance measures 
B) rewarding outcomes that are not included in the performance evaluation 
C) not granting rewards for meeting performance measures 
D) ​all of the above 
A) ​not evaluating the relevant performance measures 
B) rewarding outcomes that are not included in the performance evaluation 
C) not granting rewards for meeting performance measures 
D) ​all of the above

Question 19

​Consider an apple orchard owner deciding how to incentivize his fruit pickers to get them to pick more apples he should:

Accepted Answer

A) ​To pay the pickers per pound of apples picked 
B) To pay the pickers an hourly rate 
C) To pay the pickers an hourly rate plus a bonus 
D) ​To not pay the pickers 
A) ​To pay the pickers per pound of apples picked 
B) To pay the pickers an hourly rate 
C) To pay the pickers an hourly rate plus a bonus 
D) ​To not pay the pickers

Question 20

​Sales agents being paid a fixed commission on the sales are more likely to

Accepted Answer

A) ​Tell their bosses that they need to price higher to make sales 
B) Tell their bosses that they need to price lower to make sales 
C) Not say anything to their boss 
D) ​None of the above 
A) ​Tell their bosses that they need to price higher to make sales 
B) Tell their bosses that they need to price lower to make sales 
C) Not say anything to their boss 
D) ​None of the above

The problem the agent faces when deciding how to keep the agent motivated is called

Information gathering for an adverse selection happens

Relative to a manager of a company owned store,a franchisee is more likely to

Which of the following is a way to reduce agency costs?

When decision rights are decentralized,typically

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?

To avoid employees "gaming" the system

To solve the principle agency problem,which of the following questions should you ask

Examples of incentive pay include

Sharing contracts in franchising is when

Browsing on the Job The Dunder-Miflin Paper Company has been suffering an even greater spate of shirking by the accounting staff ever since its employees got access to the Internet on their desktop computers.Why did this not affect the sales staff as much?

A feasible solution to ensure that the sales agents are pricing the merchandise in the firm's best interest and not too aggressively is to

Examples of incentive pay include

An industrious franchisee will

The owner of the local "Fatty Foods" chain of restaurants is thinking about retiring.He has two options: he can hire salaried managers for his stores or franchise them to local entrepreneurs.If the owner believes that there are high costs to monitoring the stores after he retires,what should he do?

Potential problems with incentive based compensation are

Consider an apple orchard owner deciding how to incentivize his fruit pickers to get them to pick more apples he should:

Sales agents being paid a fixed commission on the sales are more likely to

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 problem the agent faces when deciding how to keep the agent motivated is called

​Information gathering for an adverse selection happens

​Relative to a manager of a company owned store,a franchisee is more likely to

​Which of the following is a way to reduce agency costs?

​When decision rights are decentralized,typically

​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?

​To avoid employees "gaming" the system

​To solve the principle agency problem,which of the following questions should you ask

​Examples of incentive pay include

​Sharing contracts in franchising is when

Browsing on the Job The Dunder-Miflin Paper Company has been suffering an even greater spate of shirking by the accounting staff ever since its employees got access to the Internet on their desktop computers.Why did this not affect the sales staff as much?​

​A feasible solution to ensure that the sales agents are pricing the merchandise in the firm's best interest and not too aggressively is to

​Examples of incentive pay include

​An industrious franchisee will

​Potential problems with incentive based compensation are

​Consider an apple orchard owner deciding how to incentivize his fruit pickers to get them to pick more apples he should:

​Sales agents being paid a fixed commission on the sales are more likely to

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 problem the agent faces when deciding how to keep the agent motivated is called

Information gathering for an adverse selection happens

Relative to a manager of a company owned store,a franchisee is more likely to

Which of the following is a way to reduce agency costs?

When decision rights are decentralized,typically

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?

To avoid employees "gaming" the system

To solve the principle agency problem,which of the following questions should you ask

Examples of incentive pay include

Sharing contracts in franchising is when

Browsing on the Job The Dunder-Miflin Paper Company has been suffering an even greater spate of shirking by the accounting staff ever since its employees got access to the Internet on their desktop computers.Why did this not affect the sales staff as much?

A feasible solution to ensure that the sales agents are pricing the merchandise in the firm's best interest and not too aggressively is to

Examples of incentive pay include

An industrious franchisee will

Potential problems with incentive based compensation are

Consider an apple orchard owner deciding how to incentivize his fruit pickers to get them to pick more apples he should:

Sales agents being paid a fixed commission on the sales are more likely to