1. The example of Enron shows that:
A. selection of people is the keyto organizational success or failure.
B. large incentives are the keys to getting people moving in a corporation.
C. business success is possible in a regulatory environment.
D. organizationalstructure is extremely important in business success.
2. Many economics texts discuss the question "Which markets should a firm enter?" This text focuses on the following question:
A. How shouldthe firm price its products?
B. Who are the firm's competitors?
C. How should the firm be internally structured?
D. What mix of inputs – labor and capital – is most efficient?
3. In the textbook,there is an example of a software firm in which the managers provided a financial incentive to get rid of software bugs. The result was that software writers added more bugs into the software. Thisexample shows that:
A. financial incentives should never be used.
B. most employees are very corrupt.
C. incentives can create perverse effects.
D. high-tech firms are unique.
4. EconomicDarwinism is when:
A. organizational architecture is optimized.
B. competition weeds out ill-designed organizations that fail to adapt.
C. corporate mutations occur, like Enron.
D. market benchmarksare employed.
5. A risk-averse agent:
A. only cares about expected payoff.
B. cares about expected payoff, as well as the variability of a payoff.
C. only cares about the variability of a payoff.D. always prefers a certain payoff to a risky one.
6. If employees conform to the economist's view of behavior, managers will be most effective if they can:
A. influence the costs and benefits ofemployee actions.
B. improve employee satisfaction with the job.
C. communicate goals and objectives effectively to their employees.
D. fire bad employees.
7. Assume MACROSOFT is planning to...