ISCOM 472 Week 3 DQs

 This document of ECO 100 Week 3 Discussion shows the solutions to the following problems:


 DQ 1: Corporations

 What major advantages of corporations have given rise to their dominance as form of business organization? Fully support your position in at least 200 words. Respond to at least three of your classmates

Economics - Managerial Economics
 Midterm Exam Part 1

 Question 1



 The Saturn Corporation (once a division of GM) was permanently closed in 2009.  What went wrong with Saturn?

 Answer









 Saturn’s cars sold at prices higher than rivals Honda or Toyota, so they could not sell many cars.









 Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return.









 Saturn found that young buyers of Saturn automobiles were very loyal to Saturn and GM.









 Saturn implemented a change management view that helped make first time Saturn purchasers trade up to Buick or Ca





 Question 2



 Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include:

 Answer









 cash bonuses based on length of service with the firm









 bonuses for resisting hostile takeovers









 requiring officers to own stock in the company









 large corporate staffs





 Question 3



 A Real Option Value is:

 Answer









 An option that been deflated by the cost of living index makes it a “real” option.









 An opportunity cost of capital.









 An opportunity to implement cost savings or revenue expansion in a flexible business plan.









 An objective function and a decision rule that comes from it.





 Question 4



 To reduce Agency Problems, executive compensation should be designed to:

 Answer









 create incentives so that managers act like owners of the firm.









 avoid making the executives own shares in the company.









 be an increasing function of the firm's expenses.









 be an increasing function of the sales revenue received by the firm.





 Question 5



 The moral hazard in team production arises from

 Answer









 poorly designed team membership









 lack of proper assignment of individual tasks









 disorganization in groups









 a conflict between tactically best interest and one’s duty









 insufficient experience





 Question 6



 Income tax payments are an example of ____.

 Answer









 implicit costs









 explicit costs









 normal return on investment









 shareholder wealth





 Question 7



 Based on risk-return tradeoffs observable in the financial marketplace, which of the following securities would you expect to offer higher expected returns than corporate bonds?

 Answer









 U.S. Government bonds









 municipal bonds









 common stock









 commercial paper





 Ques

For downloading more course tutorials visit - https://bitly.com/10tAQP9

As was stated in the first paragraph of this article, the quality of the education you receive in college will have a dramatic impact on the remainder of your life. To ensure that you get all of the benefits you can from college, follow the great tips and advice you've learned from reading this article.