The board of directors of Fast Food Inc, have the final say in all decisions made for the firm. Market conditions and recent poor performance has caused some discord among the board members. Which of the following statements is likely to be true?
a. The decisions the board members take may lead to compromises that are not in the interests of the shareholders.
b. Decision-making will be decentralized in this firm.
c. People lower in the hierarchy of this firm will be better equipped to take decisions.
d. The board's incentives are aligned with those of the firm's principals.
A
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Lump-sum taxes reduce the total amount of revenue that can be raised because:
A. people perceive them to be unfair. B. they have large administrative burdens. C. the size of the tax is limited by the poorest citizens' ability to pay. D. they are often applied inefficiently.
Equilibrium in the money market exists when
A) at a given interest rate, excess supply of money is equal to the quantity demanded of money. B) at a given interest rate, excess demand for money is equal to the quantity demanded of money. C) the supply of money curve intersects the demand for money curve at the prevailing interest rate. D) b and c
Mary is maximizing utility by eating three pancakes and two eggs. The principle of rational choice says that if there is diminishing marginal utility and the price of eggs rises, Mary will choose to eat more pancakes and fewer eggs.
Answer the following statement true (T) or false (F)
Twin studies are helpful in producing an unbiased estimate of the returns to schooling, because twins are likely to
A. work in the same occupation. B. earn comparable wages. C. work in the same industry. D. achieve the same amount of education. E. have similar abilities.