How is it possible to have a separation between ownership and control of a major corporation? What specific type of market imperfection can cause this?
What will be an ideal response?
If the ownership is diffuse—that is, shares are widely held, and no one person or small group holds a sizable fraction of the total shares—management may not be fully accountable to owners. Management may become a largely independent decision-making body. As long as it keeps enough cash flowing to stockholders to prevent discontent and organized rebellion, management can do as it pleases–within the confines of the law.
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Rational ignorance occurs when
a. voters find the cost of understanding a specific issue is greater than the expected benefit b. legislation generates large benefits for a few people but imposes costs on many people c. the preferences of the median voter dominates public choices d. individuals or firms attempt to obtain favorable treatment from government officials e. people make public decisions based on emotion rather than a rational analysis
As the real wage decreases, the quantity of labor demanded ________ and the quantity of labor supplied ________.
A. increases; increases B. decreases; decreases C. increases; decreases D. decreases; increases
Refer to the graphs shown, which show indifference curve analysis with the associated demand curves.
The effect of a decrease in the price of X is shown by the movements from:
A. B to C, D to F, or E to G. B. A to B, D to F, or E to G. C. B to C, D to E, or F to G. D. A to B, D to E, or F to G.
The foreign exchange rate refers to
A. the price at which purchases and sales of foreign goods take place. B. exports minus imports. C. the amount of one currency that must be paid to obtain one unit of another currency. D. the ratio of exports to imports.