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Economics: Microeconomic Analysis - Reading 16: Organizing P

Q1. Which of the following methods of organizing production is most appropriately associated with the military system of most countries?

A)   A command system.

B)   An incentive system.

C)   A participation system.

Q2. Which of the following means of organizing production is most likely to be used by a firm that has both a large outside sales force and a manufacturing facility?

A)   A command system for the sales force and an incentive system for manufacturing personnel.

B)   An incentive system for both the sales force and the manufacturing personnel.

C)   An incentive system for the sales force and a command system for manufacturing personnel.

Q3. Consider two companies, Company A and Company B. Company A is primarily a manufacturing firm with a large number of employees who are paid an hourly wage. Company B is primarily a sales and service organization with most of its employees performing their duties independently of any direct supervision. Which of the following systems for organization production are most likely to be used for Company A and Company B, respectively?

A)   Incentive system; incentive system.

B)   Command system; command system.

C)   Command system; incentive system.

Q4. Which of the following is least likely to be used to reduce the principal-agent problem in a corporation?

A)   Long-term employment contracts.

B)   An ownership incentive.

C)   A command system.

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