Spring 2020 - Managerial Economics Quiz 7 ? Question 1 1 out of 1 points A firm hiring only MBAs, regardless of the self-professed skill set is an example of Selected Answer: a. Screening mechan ...

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Spring 2020 - Managerial Economics Quiz 7
? Question 1
1 out of 1 points
A firm hiring only MBAs, regardless of the self-professed skill set is an example of
Selected
Answer: a.
Screening mechanism
Answers:
a.
Screening mechanism
b.
Signaling mechanism
c.
Way to waste money
d.
None of the above
? Question 2
1 out of 1 points
The components of a well-run incentive compensation scheme include all of the following
EXCEPT
Selected
Answer: d.
demonstrating that evaluators can be influenced with small favors
Answers:
a.
identifying the relevant measures on which to evaluate employees
b.
evaluating the identified performance measures
c.
avoiding rewards for outcomes that are not included in the performance
measures
d.
demonstrating that evaluators can be influenced with small favors
? Question 3
1 out of 1 points
The conflict between the Vice President of Marketing and her sales staff arises because
Selected
Answer: b.
the sales staff want to negotiate too aggressively
Answers:
a.
the Vice President is more willing to offer discounts to make the sale
b.
the sales staff want to negotiate too aggressively
c.
the sales staff are unwilling to offer discounts
d.
the Vice President does not want to negotiate aggressively enough to maximize

profits
? Question 4
1 out of 1 points
The following is NOT an example of a potential monitoring solution to moral hazard
Selected
Answer: a.
requiring a kitchen remodeling contractor to be
'bonded'
Answers:
a.
requiring a kitchen remodeling contractor to be
'bonded'
b.
blocking social network sites on company computers
c.
listening in on call center conversations
d.
closed circuit TVs throughout a warehouse
? Question 5
0 out of 1 points
Scatterbrain Samantha often forgets to lock her house. This has caused the probability of a
burglary to be 30%. If her house gets broken into, she faces a property loss of $10,000, otherwise
she gets to keep her $100,000. If Samantha is offered full coverage for her house at $1,500, what
is her expected wealth with the insurance policy?
Selected
Answer: d.
$97,000
Answers:
a.
$98,500
b.
$87,000
c.
$80,000
d.
$97,000
? Question 6
1 out of 1 points
The efficient transfer price is
Selected
Answer: b.
the upstream division's marginal cost
Answers:
a.
the downstream division's marginal cost
b.
the upstream division's marginal cost
c.
the downstream division's average cost
d.

the upstream division's average cost
? Question 7
0 out of 1 points
A shoe salesman working on commission must decide whether to work hard or shirk. Working
hard would increase the probability of a sale from 20% to 70% but the effort would cost him $5. If
the typical commission on a pair of shoes was $8, would he decide to work hard?
Selected
Answer: a.
Yes because it is higher than what it costs him in effort
Answers:
a.
Yes because it is higher than what it costs him in effort
b.
Yes because it is higher than zero
c.
No, beca