1. Firms grant decision rights to teams of employees for all the following reasons except:

• to manage activities
• to make products
• to make basic investment decisions
• to recommend actions

1. Incentive problems in firms typically occur because:

• employees are sometimes very risk averse.
• most of the costs of exerting effort are borne by employees rather than their employers.
• employees typically have most of their human capital invested in a single firm.
• almost all employees will have conflicts with their fellow employees.

1. One potential problem with internal labor markets is

• a greater likelihood of employee turnover.
• supervisor shirking will be more prominent in the firm.
• that incentive conflicts between employees and managers will be greater.
• restricted competition for higher-level jobs within the firm.
• a and c only.

1. Economics typically assumes that human beings perceive work effort as

• a form of disutility
• utility enhancing
• quite an enjoyable experience
• a way to express themselves in their jobs.
• none of the above.

1. Specialized task assignment greatest cost is ignoring the foregone ______________across tasks.

• comparative advantage
• flexibility
• complementarities
• lower cross training expenses

1. Organizational architecture varies from firm to firm. The three big external determinants of a firm's administrative structure are:

• decision rights, rewards, and technology.
• government regulation, technology, and decision rights.
• government regulation, technology, and markets
• government regulation, technology, and performance rewards.
• decision rights, rewards, and evaluation systems.

1. The ratchet effect refers to:

• basing a performance evaluation on expected future performance.
• A particular type of incentive pay.
• The idea that most managers are afraid to penalize employees for bad performance.
• Basing next year's standard of performance on this year's actual performance.
• None of the above.

1. Which of the following is not a determinant of a firm's org. architecture?
   • the business environment
   • a firm's business strategy
   • a firm's customer base
   • all are determinants of a firm's O.A.