Evaluate from an economic perspective the issue of whether chief executive officers (CEOs) of corporations are overpaid
What will be an ideal response?
The basic argument for why CEOs are highly paid is related to market conditions. On the supply side, there is a restrictive supply of corporate talent to provide leadership and direction for corporations. On the demand side, there is a high demand for individuals who have the qualities necessary to make major managerial decisions and lead corporations. These conditions of limited supply and high demand justify the high salaries. In addition, becoming a CEO has elements of a game or tournament. The fact that there is a prize for winning the tournament will encourage intense competition in a business and increase overall productivity. The critics of these market outcomes state that the compensation packages given to CEOs are too high because corporate boards of directors, often composed of current or former CEOs, overvalue the work of CEOs relative to that of other workers.
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Which of the following would not lead to a shift of the demand curve for apples?
a. an increase in the price of oranges b. a decrease in incomes for consumers c. a decrease in the supply of apples d. an increased preference for apples e. a decrease in the population
The Coase Theorem works because the negotiation
A. makes neither party better off. B. makes both parties better off. C. makes the party with the property rights better off. D. makes both parties equally better off.
Direct marketing is
A. advertising that permits a consumer to follow up directly by searching for more information and placing direct product orders. B. advertising intended to reach as many consumers as possible. C. advertising that targets a specific audience and allows the consumer to follow up directly by placing direct product orders usually through television or radio. D. advertising targeted at specific consumers.
The misery index is a measure of national economic discomfort that adds together a nation's:
A. Saving and investment B. Budget deficit and public debt C. Unemployment rate and inflation rate D. Level of taxation with the amount of government spending