1. Objective answer questions
1. The three legs of the organizational stool are reward systems, performance evaluation systems, and: Decision Rights
2. Fred Powell, CEO of TruLite, is in a quandary. He wants to bring out a new lamp based on fuel technology to the market. He just does not understand the technology involved. But he has several engineers that have spent a lot of time investigating the issue. Powell needs to decentralize decision making to people with specific knowledge.
3. If a manager, who does not own the company, is allowed to make decisions for the company, then: a control system of rewards and evaluation must be set up.
4. The movement of goods and resources within the corporation is done by : administrative decisions
5. One of problems with making all the decisions at the top of a business organization is costliness of:specific information
6. A household products firm was required to examine its organizational architecture in order to survive. What three aspects of its organization did it look at? Decision rights, rewards, evaluation systems.
7. Designing efficient contracts are costly when there are huge monitoring costs for the agent
8. Markets use prices to allocate resources; firms use:cost-price ratios
9. Designing efficient contracts are costly when: there is asymmetric information
10. Often people in business work in teams, each using specialized knowledge to get the tasks done. If one member of the team does no work, this is called: free riding
11. The firm or corporation is the focal point for a set of All of the above (implicit, explicit and informal contracts).
12. The firm or corporation is the focal point for a set All of the above (implicit, explicit and informal contracts).
13. Incentive problems in contractual relationships generate:costs that decrease value
14. In most models of managerial conflict, the owner is the Principal and the manager is the Agent
15. FancyFoods restaurant decided to introduce an all-you-can-eat buffet on Tuesdays and Wednesdays to increase business. They found that they acquired a whole new set of customers, most of whom are very big eaters. After a time, they increased the price of buffet. FancyFoods suffered from the problem of: adverse selection
16. Adverse selection in bargaining comes from asymmetric information held by the principal or agent.
17. While CEO of General Electric, Jack Welch was a very successful corporate manager. He also loaded up his retirement program with numerous unusual benefits such as rented apartments, free airplanes, and numerous club memberships. The owners (stockholders) were generally unaware of these benefits. This conflict between owners and managers involved perquisite taking on the part of Mr. Welch
18. Which of the following is not a problem in owner/manager (principal/agent) conflicts? Identical time horizons.
19. KaneshiHartfield is a sales representative with Plain Truth Advertising. She is an excellent sales representative, but corporate management feels that she is too independent. But they are afraid to act, since Kaneshi maintains her own list of key contacts. This is an example of:asymmetric information problems
20. Monitoring costs are the costs of reviewing and overseeing the actions of an agent
1. The three legs of the organizational stool are reward systems, performance evaluation systems, and: Decision Rights
2. Fred Powell, CEO of TruLite, is in a quandary. He wants to bring out a new lamp based on fuel technology to the market. He just does not understand the technology involved. But he has several engineers that have spent a lot of time investigating the issue. Powell needs to decentralize decision making to people with specific knowledge.
3. If a manager, who does not own the company, is allowed to make decisions for the company, then: a control system of rewards and evaluation must be set up.
4. The movement of goods and resources within the corporation is done by : administrative decisions
5. One of problems with making all the decisions at the top of a business organization is costliness of:specific information
6. A household products firm was required to examine its organizational architecture in order to survive. What three aspects of its organization did it look at? Decision rights, rewards, evaluation systems.
7. Designing efficient contracts are costly when there are huge monitoring costs for the agent
8. Markets use prices to allocate resources; firms use:cost-price ratios
9. Designing efficient contracts are costly when: there is asymmetric information
10. Often people in business work in teams, each using specialized knowledge to get the tasks done. If one member of the team does no work, this is called: free riding
11. The firm or corporation is the focal point for a set of All of the above (implicit, explicit and informal contracts).
12. The firm or corporation is the focal point for a set All of the above (implicit, explicit and informal contracts).
13. Incentive problems in contractual relationships generate:costs that decrease value
14. In most models of managerial conflict, the owner is the Principal and the manager is the Agent
15. FancyFoods restaurant decided to introduce an all-you-can-eat buffet on Tuesdays and Wednesdays to increase business. They found that they acquired a whole new set of customers, most of whom are very big eaters. After a time, they increased the price of buffet. FancyFoods suffered from the problem of: adverse selection
16. Adverse selection in bargaining comes from asymmetric information held by the principal or agent.
17. While CEO of General Electric, Jack Welch was a very successful corporate manager. He also loaded up his retirement program with numerous unusual benefits such as rented apartments, free airplanes, and numerous club memberships. The owners (stockholders) were generally unaware of these benefits. This conflict between owners and managers involved perquisite taking on the part of Mr. Welch
18. Which of the following is not a problem in owner/manager (principal/agent) conflicts? Identical time horizons.
19. KaneshiHartfield is a sales representative with Plain Truth Advertising. She is an excellent sales representative, but corporate management feels that she is too independent. But they are afraid to act, since Kaneshi maintains her own list of key contacts. This is an example of:asymmetric information problems
20. Monitoring costs are the costs of reviewing and overseeing the actions of an agent
