Question 1

When relationship-specific exchange occurs in complex contractual environments,the best way to purchase inputs is through:

Accepted Answer

A)  spot markets. 
B)  vertical integration. 
C)  short-term agency agreements. 
D)  long-term contracts. 
A)  spot markets. 
B)  vertical integration. 
C)  short-term agency agreements. 
D)  long-term contracts.

Question 2

An agent hired by the owner of productive resources to control the production process is:

Accepted Answer

A)  a laborer. 
B)  a self-proprietor. 
C)  an assembly worker. 
D)  a firm manager. 
A)  a laborer. 
B)  a self-proprietor. 
C)  an assembly worker. 
D)  a firm manager.

Question 3

By instituting performance-based rewards to CEOs the profits of firms will:

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain constant. 
D)  None of the preceding statements is correct. 
A)  rise. 
B)  fall. 
C)  remain constant. 
D)  None of the preceding statements is correct.

Question 4

Discuss the benefits and costs of the following methods of monitoring worker performance:
a.Hidden video cameras in the workplace.
b.Time clocks.
c.Paying workers based on the output they produce.

Accepted Answer

a.The benefits are that it may be effect

Question 5

Refer to the figure below.Suppose that the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $50.Based on this information,the optimal contract length should:

Accepted Answer

A)  be increased. 
B)  be decreased by half. 
C)  be decreased by two-thirds. 
D)  be held constant at the contract length where MB = 100 and MC = 50. 
A)  be increased. 
B)  be decreased by half. 
C)  be decreased by two-thirds. 
D)  be held constant at the contract length where MB = 100 and MC = 50.

Question 6

Which of the following involves the LEAST risk from the point of view of the employee?

Accepted Answer

A)  Piece rate 
B)  Profit sharing 
C)  Revenue sharing 
D)  Annual salary 
A)  Piece rate 
B)  Profit sharing 
C)  Revenue sharing 
D)  Annual salary

Question 7

Refer to the figure below.Suppose that the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $100.Based on this information,the optimal contract length should be:

Accepted Answer

A)  increased by half. 
B)  increased by two-thirds. 
C)  decreased. 
D)  held constant at the contract length where MB = 100 and MC = 100. 
A)  increased by half. 
B)  increased by two-thirds. 
C)  decreased. 
D)  held constant at the contract length where MB = 100 and MC = 100.

Question 8

A negative side of long-term contracts is:

Accepted Answer

A)  high transaction costs. 
B)  a loss of flexibility. 
C)  the continual need to renegotiate the contract. 
D)  None of the statements is correct. 
A)  high transaction costs. 
B)  a loss of flexibility. 
C)  the continual need to renegotiate the contract. 
D)  None of the statements is correct.

Question 9

A firm manager is an agent hired by the:

Accepted Answer

A)  owner to control the production process. 
B)  workers to control the production process. 
C)  workers to consult with the owner. 
D)  owner to oversee the workers. 
A)  owner to control the production process. 
B)  workers to control the production process. 
C)  workers to consult with the owner. 
D)  owner to oversee the workers.

Question 10

A long-term contract:

Accepted Answer

A)  occurs when a firm produces its own inputs. 
B)  is most likely in complex exchange environments. 
C)  exists when a firm is legally bound to purchase inputs from a particular supplier. 
D)  is shorter when specialized investments are important. 
A)  occurs when a firm produces its own inputs. 
B)  is most likely in complex exchange environments. 
C)  exists when a firm is legally bound to purchase inputs from a particular supplier. 
D)  is shorter when specialized investments are important.

Question 11

If a firm manager has a base salary of $50,000 and also gets 2 percent of all profits,how much will his/her income be if revenues are $8,000,000 and profits are $2,000,000?

Accepted Answer

A)  $250,000 
B)  $210,000 
C)  $90,000 
D)  $150,000 
A)  $250,000 
B)  $210,000 
C)  $90,000 
D)  $150,000

Question 12

A spot exchange involves a market where goods are bought and sold at a:

Accepted Answer

A)  contracted market price. 
B)  prevailing market price. 
C)  predetermined market price. 
D)  post-determined market price. 
A)  contracted market price. 
B)  prevailing market price. 
C)  predetermined market price. 
D)  post-determined market price.

Question 13

Franchising mitigates:

Accepted Answer

A)  opportunism. 
B)  relationship-specific investment. 
C)  the hold-up problem. 
D)  the principal-agent problem. 
A)  opportunism. 
B)  relationship-specific investment. 
C)  the hold-up problem. 
D)  the principal-agent problem.

Question 14

By making managerial compensation depend on the performance of the firm's profits,the firm owner's profits:

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain constant. 
D)  initially fall, then rise. 
A)  rise. 
B)  fall. 
C)  remain constant. 
D)  initially fall, then rise.

Question 15

When a manager enters the workplace from time to time to monitor workers,he is using:

Accepted Answer

A)  a profit-sharing plan. 
B)  spot checks. 
C)  a revenue-sharing plan. 
D)  a piece-rate payment plan. 
A)  a profit-sharing plan. 
B)  spot checks. 
C)  a revenue-sharing plan. 
D)  a piece-rate payment plan.

Question 16

The LEAST risky payment plan from the viewpoint of the worker is:

Accepted Answer

A)  piece rate. 
B)  profit sharing. 
C)  revenue sharing. 
D)  hourly wage. 
A)  piece rate. 
B)  profit sharing. 
C)  revenue sharing. 
D)  hourly wage.

Question 17

An incentive for managers to maximize profits is:

Accepted Answer

A)  reputation. 
B)  performance bonuses. 
C)  takeovers. 
D)  All of the statements associated with this question are correct. 
A)  reputation. 
B)  performance bonuses. 
C)  takeovers. 
D)  All of the statements associated with this question are correct.

Question 18

A manager who tries to enhance worker effort by tying workers' compensation to the profitability of the firm is using:

Accepted Answer

A)  spot checks. 
B)  revenue sharing. 
C)  profit sharing. 
D)  piece rates. 
A)  spot checks. 
B)  revenue sharing. 
C)  profit sharing. 
D)  piece rates.

Question 19

Given that the income of franchise restaurant managers is directly tied to profits and the income of the manager of the company-owned restaurant is paid a flat fee,we might expect profits to be:

Accepted Answer

A)  higher in company-owned restaurants. 
B)  lower in company-owned restaurants. 
C)  equal in both types of restaurants. 
D)  None of the statements are correct. 
A)  higher in company-owned restaurants. 
B)  lower in company-owned restaurants. 
C)  equal in both types of restaurants. 
D)  None of the statements are correct.

Question 20

Long-term contracts are generally preferable to:

Accepted Answer

A)  spot markets. 
B)  short-term contracts. 
C)  vertical integration. 
D)  None of the preceding statements is correct. 
A)  spot markets. 
B)  short-term contracts. 
C)  vertical integration. 
D)  None of the preceding statements is correct.

When relationship-specific exchange occurs in complex contractual environments,the best way to purchase inputs is through:

An agent hired by the owner of productive resources to control the production process is:

By instituting performance-based rewards to CEOs the profits of firms will:

Discuss the benefits and costs of the following methods of monitoring worker performance: a.Hidden video cameras in the workplace. b.Time clocks. c.Paying workers based on the output they produce.

Refer to the figure below.Suppose that the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $50.Based on this information,the optimal contract length should:

Which of the following involves the LEAST risk from the point of view of the employee?

Refer to the figure below.Suppose that the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $100.Based on this information,the optimal contract length should be:

A negative side of long-term contracts is:

A firm manager is an agent hired by the:

A long-term contract:

If a firm manager has a base salary of $50,000 and also gets 2 percent of all profits,how much will his/her income be if revenues are $8,000,000 and profits are $2,000,000?

A spot exchange involves a market where goods are bought and sold at a:

Franchising mitigates:

By making managerial compensation depend on the performance of the firm's profits,the firm owner's profits:

When a manager enters the workplace from time to time to monitor workers,he is using:

The LEAST risky payment plan from the viewpoint of the worker is:

An incentive for managers to maximize profits is:

A manager who tries to enhance worker effort by tying workers' compensation to the profitability of the firm is using:

Given that the income of franchise restaurant managers is directly tied to profits and the income of the manager of the company-owned restaurant is paid a flat fee,we might expect profits to be:

Long-term contracts are generally preferable to:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

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Exam 6: The Organization of the Firm

When relationship-specific exchange occurs in complex contractual environments,the best way to purchase inputs is through:

An agent hired by the owner of productive resources to control the production process is:

By instituting performance-based rewards to CEOs the profits of firms will:

Discuss the benefits and costs of the following methods of monitoring worker performance: a.Hidden video cameras in the workplace. b.Time clocks. c.Paying workers based on the output they produce.

Refer to the figure below.Suppose that the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $50.Based on this information,the optimal contract length should:

Which of the following involves the LEAST risk from the point of view of the employee?

Refer to the figure below.Suppose that the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $100.Based on this information,the optimal contract length should be:

A negative side of long-term contracts is:

A firm manager is an agent hired by the:

A long-term contract:

If a firm manager has a base salary of $50,000 and also gets 2 percent of all profits,how much will his/her income be if revenues are $8,000,000 and profits are $2,000,000?

A spot exchange involves a market where goods are bought and sold at a:

Franchising mitigates:

By making managerial compensation depend on the performance of the firm's profits,the firm owner's profits:

When a manager enters the workplace from time to time to monitor workers,he is using:

The LEAST risky payment plan from the viewpoint of the worker is:

An incentive for managers to maximize profits is:

A manager who tries to enhance worker effort by tying workers' compensation to the profitability of the firm is using:

Given that the income of franchise restaurant managers is directly tied to profits and the income of the manager of the company-owned restaurant is paid a flat fee,we might expect profits to be:

Long-term contracts are generally preferable to:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters