Tom & Jerry are running Hanna Barbera's lemonade stand as two profit centers. Tom makes the lemonade while Jerry sells it. Jerry argues that Tom is transferring the lemonade to him priced too high, which forces him to charge the customers a high price, losing sales. Does the decision maker have the incentive to make a good decision?
a. Yes, because it increases the division profit
b. No, because it decreases division profit
c. Yes, because it does not affect division profit
d. No, because it increases company-wide profit
b
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Most of the state and local government employees are in what area?
A. Education B. Highways C. Health care D. Administration
The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton. The quantity produced once the price support is in place is
A) 400 million tons. B) 300 million tons. C) 100 million tons. D) 250 million tons. E) 200 million tons.
Some economists argue suddenly reducing money supply growth is a costly way to reduce inflation and that it may not work. For example, if a government cuts money growth but makes no real fiscal reforms, people will expect the government will eventually
need to expand the money supply to pay for its expenditures. Thus, the promise to fight inflation will not be credible. Explain why credibility is important to a reduction in the inflation rate.
Which of the following products has an elastic demand?
A. water B. coffee C. cars D. salt