Describe the three aspects of organizational architecture of a firm. Which is the most important aspect?
What will be an ideal response?
The three important aspects are assignment of decision rights, the reward system, and the evaluation system. These aspects are interdependent and thus are equally important. The fundamental problem of designing organizational architecture is to ensure that decision makers in the organization have both the relevant information and the appropriate incentives to make decisions that enhance the organization's value. The actual organizational architecture should fit external conditions and also the distribution of knowledge within the organization. If lower-level employees have the relevant knowledge, it may make sense to decentralize decision rights. However, reward and performance-evaluation systems must be set up to control incentive problems.
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Which of the following is true?
i. In an unregulated market with an external benefit, consumers don't take it into account and consume less than the efficient quantity. ii. Marginal social cost equals marginal private cost minus marginal external cost. iii. An unregulated market produces more than the efficient quantity of a good with an external cost. A) Only i B) Only ii C) Only iii D) i and ii E) i and iii
What is the law of supply? What does this law imply about the shape of the supply curve?
What will be an ideal response?
You and two partners start a company. However, your partners play no role in running the company. You devote all our time and talent to run your own business rather than working for someone else. You incur an(a):
a. explicit cost. b. marginal cost. c. sunk cost. d. opportunity cost.
If a country's imports are very important in determining the volume of exports from its trading partners, then:
a. the simple spending multiplier understates the true value of the multiplier. b. the spending multiplier will be equal to 1/marginal propensity to import. c. the simple spending multiplier is an accurate measure of the multiplier effect. d. the simple spending multiplier will be equal to 1/MPC e. the spending multiplier will be equal to 1/marginal propensity to save.