Question 18 Externalities occur when there is a lack of free-riding. well-define

Question

Question 18

Externalities occur when there is a lack of

free-riding.

well-defined property rights.

market participants.

government regulation.

3 points   

Question 19

When people buy insurance they often adopt risky behavior. This is an example of

adverse selection.

moral hazard.

a negative externality.

moral hazard and a negative externality.

3 points   

Question 20

All the costs of a transaction are referred to as

transfer costs.

transactions costs.

marketing expenditures.

accounting costs.

3 points   

Question 21

Firms would not exist if

contracts were incomplete.

residual income equaled normal profit.

income was spontaneously earned.

contracts were complete.

3 points   

Question 22

The Prime Directive says look to

the market.

the government.

competitors.

all of these choices.

3 points   

Question 23

A firm can find a competitive advantage

by differentiating its product.

by having a barrier to entry.

through its organizational structure.

all of these choices.

3 points   

Question 24

An organizational form that is structured around basic business functions is called

M-form.

U-form.

a matrix.

a network.

3 points   

Question 25

The set of collectively held beliefs, values, and norms among the members of a firm that influence individual behavior is referred to as

network values.

horizontal values.

implicit contracts.

corporate culture.

3 points   

Question 26

"People who have dental insurance don't floss often enough." This is an example of

asymmetric information.

bad parenting.

moral hazard.

risk adverse behavior

3 points   

Question 27

A common way used to align the interests of managers with the interests of equity holders is

piecework pay.

stock options.

forwarded loaded pay schemes.

insurance.

3 points   

Question 28

A piecework wage compensation may be used if productivity

can be related to the supply chain.

is easy to measure.

is difficult to observe.

is backloaded.

free-riding.

well-defined property rights.

market participants.

government regulation.

Explanation / Answer

Question 18

Externalities occur when there is a lack of

free-riding.

well-defined property rights.

market participants.

government regulation.

3 points   

Question 19

When people buy insurance they often adopt risky behavior. This is an example of

adverse selection.

moral hazard.

a negative externality.

moral hazard and a negative externality.

3 points   

Question 20

All the costs of a transaction are referred to as

transfer costs.

transactions costs.

marketing expenditures.

accounting costs.

3 points   

Question 21

Firms would not exist if

contracts were incomplete.

residual income equaled normal profit.

income was spontaneously earned.

contracts were complete.

3 points   

Question 22

The Prime Directive says look to

the market.

the government.

competitors.

all of these choices.

3 points   

Question 23

A firm can find a competitive advantage

by differentiating its product.

by having a barrier to entry.

through its organizational structure.

all of these choices.

3 points   

Question 24

An organizational form that is structured around basic business functions is called

M-form.

U-form.

a matrix.

a network.

3 points   

Question 25

The set of collectively held beliefs, values, and norms among the members of a firm that influence individual behavior is referred to as

network values.

horizontal values.

implicit contracts.

corporate culture.

3 points   

Question 26

"People who have dental insurance don't floss often enough." This is an example of

asymmetric information.

bad parenting.

moral hazard.

risk adverse behavior

3 points   

Question 27

A common way used to align the interests of managers with the interests of equity holders is

piecework pay.

stock options.

forwarded loaded pay schemes.

insurance.

3 points   

Question 28

A piecework wage compensation may be used if productivity

can be related to the supply chain.

is easy to measure.

is difficult to observe.

is backloaded.

free-riding.

well-defined property rights.

market participants.

government regulation.

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