An incentive problem arising from decentralization of decision making is that
A. managers often recruit weaker subordinates and refrain from training them properly.
B. the costs of coordination among local managers is very high.
C. there is less effective use of central information and expertise.
D. it leads to communication problems relating to performance evaluation of employees.
Answer: A
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According to human capital theory, all of the following help make workers more productive EXCEPT
A) health and fitness. B) increased unemployment benefits. C) skills. D) education.
At a Mufflers-R-Us repair shop customers have the opportunity to wait in a room with chairs, a television, magazines, coffee and donuts. The economic way of thinking suggests the muffler shop is
A) selling mufflers below cost. B) selling the additional goods and services below cost. C) attempting to increase its total profit D) engaging in unfair trade practice because it provides the goods and services free of charge. E) almost certainly doing none of the above.
Prices enable a market economy to adjust to unexpected events by
a. maintaining consumption and production at stable levels. b. government rationing. c. ensuring that producers always earn a profit. d. adjusting consumption and production.
In economics, the planning horizon is defined as
A. the long run, during which all inputs are variable. B. the period of time for which technology is fixed. C. the shortest time period over which the firm can make decisions. D. the immediate future, such as the next day that any action can be taken.