Some corporate governance experts believe that serving on a company's board of directors for an extended length of time diminishes that member's independence from the company's CEO. If this is true, it would tend to
A) reduce the principal-agent problem.
B) increase the principal-agent problem.
C) be in the best interest of shareholders.
D) have no impact on the company's performance, since the CEO is only one member of top management.
Answer: B
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Refer to Figure 15-9. At the profit-maximizing quantity, what is the difference between the monopoly's price and the marginal cost of production?
A) $8 B) $11.50 C) $21 D) There is no difference.
"For goods that are unrelated in consumption, efficiency requires that tax rates be inversely proportional to elasticities." This is the definition of
A. the benefits-received principle. B. the Ramsey Rule. C. the second best principle. D. the inverse elasticity rule.
If the price elasticity of demand (Ep) equals one in the short run, then, other things being equal, in the long run Ep will be
A) one. B) less than one. C) greater than one. D) indeterminate without more information.
The existence of the underground economy causes gross domestic product (GDP) statistics to _____
a. understate the true volume of economic activity b. overstate the aggregate price level in the economy c. overstate the standard of living d. overstate the profit of firms e. understate government spending in an economy