What is the problem with paying plant managers in multi-plant firms according to how much each plant produces relative to its capacity?
A) Managers in low-cost or high-capacity plants could be penalized, in percentage terms, for their overproduction.
B) The production problem in multi-plant firms is usually how to lower production to increase market power, not how to increase production.
C) Managers in high-cost or low-capacity plants could be penalized for production constraints over which they have no control.
D) Managers would have an incentive to understate the productive capacity of their plants.
E) Managers would have an incentive to overstate the productive capacity of their plants.
D
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An optimal decision is one that chooses
A. the most desirable alternative among the possibilities permitted by the resources available. B. the lowest cost method of meeting goals, without regard to quality or any other feature. C. among various possible goals and offends no one, so that all are equally happy. D. among equally important goals, and thereby avoids the “indispensable necessity” syndrome. E. among possible goals in such a way that spends as little money as possible.
Answer the question on the basis of the following data. All figures are in billions of dollars: Government Purchases 15 Consumption 90 Gross Investment 20 Consumption of Fixed Capital 5 Exports 8 Imports 12 Refer to the above data. NDP is:
a) $116. b) $121. c) $125. d) $150.
The present value and the interest rate have:
A. no relationship. B. an unclear relationship; whether it is direct or inverse depends on the interest rate. C. a direct relationship; as i increases, pv increases. D. an inverse relationship; as i increases, pv decreases.
In a competitive industry with identical firms, long-run equilibrium is characterized by:
A. MR = MC. B. P < MC. C. MR < P. D. P > AC.