Ethics codes in corporate life tend to emphasize (a) compliance with laws and regulations, (b) honesty and integrity, and (c) avoidance of conflicts of interests. Which one is the most important in today's world? How does economics help in understanding its importance?
What will be an ideal response?
All of these factors have a bearing on shareholder value. Violation of laws and regulations can lead to substantial fines and loss of reputation for the firm. Lack of honesty and integrity can discourage repeat business with repeat customers; if the firm's reputation for honest dealings is publicly tarnished, potential customers are less likely to become new customers. Conflicts of owners' vs. managers' interests, i.e. agency problems, will decrease firm value. Incentives are at the heart of all three problems. Economics can identify which aspects of organizational architecture can be altered to remediate or prevent violations of a firm's code of ethics.
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Which one of the following statements is the most accurate?
A. An increase in disposable income worsens the current account. B. An increase in disposable income improves the current account. C. An increase in disposable income does not affect the current account. D. An increase in income worsens the current account.
In countries like Botswana and Zimbabwe, local villages have been given property rights over local elephants with the result that elephant populations:
A. have been decimated as villagers try to maximize short-run profit. B. have grown as villagers have protected the elephants to support their tourist industry. C. have grown exponentially, with adverse environmental impacts. D. are in serious decline as ivory prices have risen.
An entrepreneur is considering how many limousines to purchase when he starts up a limousine service. Below are his estimates of the number of limousine rentals the service will make during a year, depending on the number of limousines available.Number oflimousinesTotal numberof rentals13502650390041,10051,250After paying all non-interest expenses, the owner expects to net $10 per rental. Each limousine costs $50,000. How many limousines should he purchase if the real interest rate is 6.5%?
A. 2. B. 4. C. 3. D. 1.
The table above shows the weekly relationship between output and number of workers for a factory with a fixed size of plant
a. Calculate the marginal product of labor. b. At what point does diminishing returns set in? c. Calculate the average product of labor. d. Find the three stages of production.