Kevin Freeman is the head of a team developing plastic knee replacements. His research team has discovered an improved materials-handling procedure that reduces contamination of the product during assembly. The issue for the company after the discovery is
A. whether to transfer this new knowledge for general corporate use.
B. to figure out how this discovery can be utilized to reduce influence costs.
C. whether or not this specific knowledge can be implemented in the knee team's process.
D. how this specific knowledge can be transferred to the company's whole production process.
Answer: D
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A firm that engages in efficient production
A) cannot produce the same output with fewer inputs. B) could produce the same output with fewer inputs if it wanted to. C) is not interested in profit maximization. D) uses old technology to minimize costs.
Adverse selection and moral hazard problems arise when there is
A) complete information B) asymmetric information. C) too much information. D) symmetric information.
Legislation that offers immediate and easily recognized benefits, at the expense of costs that are observable only in the distant future, is often enacted even when economic inefficiency results. This can be expected because of
a. a lack of incentive for operational efficiency in the public sector. b. market failure. c. the special-interest effect. d. the shortsightedness effect.
In economic terms, property means
a. everything an individual owns and the labor he/she provides b. everything an individual owns but not the labor he/she provides c. some things an individual owns and the labor he/she provides d. some things an individual owns but not the labor he/she provides