If D represents the level of decentralization of corporate decisionmaking, and A and C are positive constants, then Benefits = B × D and Costs = A × D + C × D2. The optimal level of decentralization occurs where the
A. sum of the squares of the distance between the benefits and costs curves is minimized.
B. level of benefits is greatest.
C. vertical distance between the benefits and costs curves is greatest.
D. horizontal distance between the benefits and costs curves is greatest.
Answer: C
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If an economy is operating on its production possibility frontier, which of the following statements is true?
A. Products are produced using inefficient production technology. B. The capacity utilization rate is less than full production. C. The economy's labor force is fully employed. D. A fall in the price of an input will enable the economy to produce outside the production possibility frontier.
Screening is
a. actions by the informed party to reveal her true risks b. actions by the informed party to conceal her true risks c. actions by the uninformed party to uncover the true risks d. actions by the uninformed party to conceal the true risks
A strategy is weakly dominated if:
A. there are no other strategies that yield higher payoffs, regardless of others' choices. B. there is some other strategy that yields a strictly higher payoff regardless of others' choices. C. there is some other strategy that yields a strictly higher payoff in some circumstances and that never yields a lower payoff regardless of others' choices. D. there is some other strategy that yields a strictly higher payoff in some circumstances and may yield a lower payoff, depending upon other players' choices.
Suppose at a particular level of real gross domestic product (GDP), there are no unintended inventory adjustments. In this context, which of the following is true?
a. Real GDP is less than the equilibrium level of real GDP demanded. b. Real GDP is greater than the equilibrium level of real GDP demanded. c. Real GDP equals the equilibrium level of real GDP demanded d. At equilibrium real GDP, there is no inflation. e. At equilibrium real GDP, there is no saving.