ECO MCQ Test 2 - 2015: Market Structures, Incentives, and Profit Maximization
A fully solved multiple-choice test covering key economic concepts, including market structures and profit strategies.
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ECO MCQ TEST 2 2015
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1. Which of the following forms of payment is not an incentive plan?
A. Commission plans for salesman
B. Flat salary for a plant manager
C. Bounses for managers that increase as profits increase
D. None of the above
2. When relationship-specific exchange occurs in complex contractural environments, the best
way to purchase inputs is through:
A. Spot markets
B. Vertical integration
C. Short-term agency agreements
D. Long-term contracts
3. Suppose compensation is given by W = 512,000 + 217X(Profits)+ 10.08S, where W = total
compensation of the CEO, X = company profits (in millions) = $200, and S = Sales (in millions)
= $400. How much will this CEO be compensated?
A. $812,431
B. $43,400
C. $555,400
D. $559,432
4. Long-term contracts are not efficient if:
A. A firm engages in relationship-specific exchange
B. Specialized investments are unimportant
C. The contractural environment is simple
D. A and C, only
5. The solutions to the principal-agent problem ensures that the firm is operating
A. On the production function
B. Above the production function
C. Below the production function
D. Above the isoquant curve
6. Spot exchange typically involves
Report this Question as Inappropriate
1. Which of the following forms of payment is not an incentive plan?
A. Commission plans for salesman
B. Flat salary for a plant manager
C. Bounses for managers that increase as profits increase
D. None of the above
2. When relationship-specific exchange occurs in complex contractural environments, the best
way to purchase inputs is through:
A. Spot markets
B. Vertical integration
C. Short-term agency agreements
D. Long-term contracts
3. Suppose compensation is given by W = 512,000 + 217X(Profits)+ 10.08S, where W = total
compensation of the CEO, X = company profits (in millions) = $200, and S = Sales (in millions)
= $400. How much will this CEO be compensated?
A. $812,431
B. $43,400
C. $555,400
D. $559,432
4. Long-term contracts are not efficient if:
A. A firm engages in relationship-specific exchange
B. Specialized investments are unimportant
C. The contractural environment is simple
D. A and C, only
5. The solutions to the principal-agent problem ensures that the firm is operating
A. On the production function
B. Above the production function
C. Below the production function
D. Above the isoquant curve
6. Spot exchange typically involves
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Subject
Economics