Why are corporate executives are often guaranteed "golden parachutes" if they should be fired?
a. To give them the incentive to take the higher levels of risk desired by stockholders.
b. To ensure that they exercise great caution in spending stockholders' money.
c. To encourage the most experienced people to apply for the executive positions.
d. To provide a signal to the public that the firm is on solid financial ground.
a. To give them the incentive to take the higher levels of risk desired by stockholders.
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The practice of spreading one's wealth over a variety of different financial investments in order to reduce overall risk is called:
A. diversification. B. following the risk premium. C. allocation. D. risk reservation.
Suppose a student is attending your college on an athletic scholarship, and doesn't pay a penny for tuition. According to the economic way of thinking, the student's cost of attending college is
A) zero. B) bore completely by the college's athletic fund. C) positive, because the student sacrificed some other opportunity to attend your college. D) positive, because the student still needs food and housing. E) negative, because nobody really gains by trying to combine athletics with higher education.
Based on Scenario 6.1 above, value added in the United States is
A) $500. B) $600. C) $400. D) $300. E) None of the above.
The price elasticity of demand for a variable input will be greater
A) the fewer substitutes there are for the final product. B) the easier it is for a particular input to be substituted for by other inputs. C) the lower the price elasticity of supply of all other inputs. D) the smaller the proportion of total costs accounted for by a particular variable input.