Why are command- and -control regulations less flexible than incentive based systems?
What will be an ideal response?
Although answers will vary, the main reason is monitoring costs and the costs involved in
punishment strategies for offenders. Incentive systems induce firms to act in their own best
interests which are less time consuming.
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Countries in sub-Saharan Africa are economically disadvantaged because infectious diseases spread in these countries relatively easily. This statement reflects the:
A) geography hypothesis. B) culture hypothesis. C) location hypothesis. D) institutions hypothesis.
Which of the following is an economic argument used to explain why slavery persisted in the U.S.?
(a) Slavery crushed out individualism among slaves. (b) The social structure of slavery did not permit black leaders to lead revolts. (c) Slavery was an overall moral institution. (d) Slavery was a rational institution.
Answer the following statements true (T) or false (F)
1) Managers of the dairy farmers association can eliminate the industrywide free-rider problem using the law that makes checkoff payments mandatory. 2) In regard to industrywide advertising, creating small groups of participating firms increases the opportunity for free-riding. 3) Resale price maintenance is only profitable if consumers' valuation of the product-specific service exceeds the retailer's marginal cost of providing it. 4) As a manager, if you are aware that your competitors are bribing officials, your firm does not face negative legal outcomes if you report the bribery. 5) As a manager of a firm operating a foreign market, the FCPA does not allow you to make small facilitating payments, but the U.K. Bribery Act does.
Assume the price of Advil increases. As a result, you decrease the quantity of Advil purchased each month and purchase more Tylenol. This is an example of the:
a. income effect. b. utility effect. c. consumption effect. d. substitution effect.