Test Bank for Managerial Economics: A Problem Solving Approach, 6th Edition by Froeb
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Course
Managerial Economics
Institution
Managerial Economics
Test Bank for Managerial Economics: A Problem Solving Approach 6e 6th Edition by Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor. Full Chapters test bank are included - Chapter 1 to 23
Part I: PROBLEM SOLVING AND DECISION MAKING.
1. Introduction: Incentive Alignment.
2. The One Less...
Managerial Economics 6th Edition by Froeb Test Bank
Chap 01 6e Froeb
Indicate whether the statement is true or false.
1. The rational actor paradigm is a tool for analyzing behavior and a good way to live your life.
a. True
b. False
2. Recognizing that individuals tend toward self-interest is not equivalent to encouraging selfish behavior.
a. True
b. False
3. The rational actor paradigm is much more than a tool for analyzing behavior; indeed, it is a good way to live your
life.
a. True
b. False
4. Recognizing that individuals tend toward self-interest is not equivalent to encouraging selfish behavior.
a. True
b. False
5. Recognizing that individuals tend toward self-interest is equivalent to encouraging selfish behavior.
a. True
b. False
6. Recognizing that individuals tend toward self-interest is equivalent to encouraging selfish behavior.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
7. When an employee has enough information to make good decisions, and the incentive to do so, we say
a. that the employee's incentives are orthogonal to the goals of the organization.
b. that the employee's incentives need to be removed in order to better help the organization.
c. that the employee's incentives are aligned with the goals of the organization.
d. that the employee's incentives are unnecessary and only come at a cost to the firm.
8. Suppose a car dealership hires dealers to sell their cars. The dealers can negotiate the sales prices of cars within
certain ranges above the manufacturer's suggested retail price (MSRP), between 2% and 10% higher. In
addition, the dealers are given 5% of the total value of the car sold. The owners of the dealership, however, soon
discover that almost all dealers are selling cars for only a 2% markup over MSRP. Use the problem-solving
algorithm to select a likely explanation below.
a. Dealers do not have enough information about which cars are likely to sell for higher markups over MSRP.
b. Dealers are incapable of negotiating for higher markups due to lack of persuasive ability.
c. Dealers are not to blame. Dealership management should never give them the power to negotiate sales
price.
d. Dealers get paid based off the price of the car sold and benefit more from selling more cars at a 2%
markup versus fewer cars at a 10% markup.
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