The bonus of a plant manager in a vertically integrated firm is based on the following formula:
Bonus = 10,000 - 0.5(Qf - Q)
where Qf is feasible production and Q is actual production. The value for Qf is provided by the plant manager at the beginning of the year. With this scheme, the plant manager has an incentive:
A) to underestimate Qf.
B) to overestimate Qf.
C) to reveal the true Qf and make Q as small as possible.
D) to reveal the true Qf and make Q as large as possible.
A
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Payoffs are:
A. the rewards that come from particular actions. B. always monetary. C. things that are only enjoyed by the winner. D. bribes made to gain some advantage unfairly during a game.
Under the rule of reason, a U.S. firm with an 80 percent market share
a. will always be found in violation of the Sherman Antitrust Act b. will never be found in violation of the Sherman Antitrust Act c. may be found in violation of the Sherman Antitrust Act, depending on the firm's conduct d. will always be found in violation of the Sherman Antitrust Act if there is only one other firm in the industry e. will be found in violation of the Sherman Antitrust Act only if there is only one other firm in the industry
Which of the following is a characteristic of a monopoly?
a. a large number of sellers b. homogeneous products c. large barriers to entry d. price taking firms
When is it not necessary to build a new market supply schedule?
(A) When new technology is used to produce a good. (B) When there is a change in input costs. (C) When there is a change in the number of suppliers. (D) When there is a change in the price of a good.