Question
1. Which of the following is NOT an implication of specialized investments that lead to increased transaction costs? Underinvestment in specialized investment Incentive contracts Costly
1. Which of the following is NOT an implication of specialized investments that lead to increased transaction costs?
Underinvestment in specialized investment
Incentive contracts
Costly bargainig
Opportunism and the hold-up problem
2. Piece rates are typically a solution to the:
None of the statements is correct
manager-owner, principal-agent problem.
owner-worker, principal-agent problem.
manager-worker, principal-agent problem.
3. Suppose compensation is given by W = 100,000 + 157 + 12S, where W = total compensation of the CEO, = company profits (in millions) = $340, and S = sales (in millions) = $700. What percentage of the CEO's total earnings is tied to sales of the firm?
13.5 percent
5.2 percent
19.6 percent
33.0 percent
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