Corporations have a separation and control problem because
A. the shareholders control the firm.
B. taxes are paid only by the board of directors.
C. most of the profits are reinvested.
D. owners and managers frequently have different incentives.
Answer: D
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By vertically integrating, two firms can
A) increase market share. B) avoid holdup problems. C) limit the problems inherent in moving too quickly. D) avoid antitrust issues.
Credibility in threats and commitments in sequential games is based on
a. randomizing one's actions so they are unpredictable b. explicit communications with competitors c. effective scenario planning d. analyzing best reply responses e. none of the above
The negative effect of having more potential volunteers resulting in a reduced likelihood of a beneficial outcome is known as the
A) diffusion effect. B) externalizing effect. C) group dynamic effect. D) size effect.
An open market purchase of bonds by the Fed
a. will shift the money supply curve to the left. b. will drain reserves from the banking system and shift the money supply curve to the right. c. will inject reserves into the banking system and shift the money supply curve to the left. d. will shift the money supply curve to the right. e. will change the slope of the money supply curve.