Reading 16: Organizing Production LOS d习题精选 2010, countries, following, measures

honeycfa

LOS d: Explain command systems and incentive systems to organize production, the principal-agent problem, and measures a firm uses to reduce the principal-agent problem.

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

A) An incentive system.

B) A command system.

C) A participation system.

---

The command system is used to coordinate production through a chain-of-command organizational structure, similar to a military system.

 

honeycfa

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 the sales force and a command system for manufacturing personnel.

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

---

Command systems are used when it is easy to monitor the performance of employees, as in the case of manufacturing personnel. Incentive systems are usually most effective for organizing the production of employees whose activities are difficult or costly to monitor, like those of outside sales people.

honeycfa

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; incentive system.

C) Command system; command system.

---

Command systems are used when it is easy to monitor the performance of employees, as is usually the situation with hourly production workers. Incentive systems are usually most effective for organizing the production of employees whose activities are difficult to supervise, like those of independent sales people.

honeycfa

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.

---

Command systems are not used to reduce the principal-agent problem. The command system is used to coordinate production through a chain-of-command organizational structure, like an army.

 

honeycfa

Which of the following statements about types of business organizations is most accurate?

A) One advantage of a partnership over a sole proprietorship is a limitation on the partners’ liability for the firm’s financial obligations.

B) The principal-agent problem is a disadvantage of a sole proprietorship because the decision making power rests with the owner, who is the principal agent of the firm.

C) Corporations can usually raise large amounts of capital more easily and inexpensively than either partnerships or sole proprietorships.

---

The relative ease of raising large amounts of capital inexpensively is one of the primary advantages of the corporate form of business organization over a sole proprietorship or partnership.

The principal-agent problem refers to the difference between the incentives of a corporation’s managers and its owners. Partnerships and sole proprietorships both expose their owners to unlimited liability for debts and other legal liabilities. Partnership income is taxed only once.