Questions from Managerial Economics


Q: Do you believe that the profit maximization model can be applied to

Do you believe that the profit maximization model can be applied to the activities of a multinational corporation? Explain.

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Q: What are transaction costs? How does opportunistic behavior tend to increase

What are transaction costs? How does opportunistic behavior tend to increase transaction costs?

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Q: The outsourcing of important parts of a company’s production has been growing

The outsourcing of important parts of a company’s production has been growing in recent years. How would you explain these changes? How has the Internet contributed to these changes?

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Q: Discuss the difference between profit maximization and shareholder wealth maximization. Which

Discuss the difference between profit maximization and shareholder wealth maximization. Which of these is a more comprehensive statement of a company’s economic objectives?

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Q: Explain the term satisfice as it relates to the operations of a

Explain the term satisfice as it relates to the operations of a large corporation.

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Q: Discuss the difference between the calculation of shareholder wealth and the concept

Discuss the difference between the calculation of shareholder wealth and the concept of Market Value Added. Which of the two would appear to be more meaningful from the viewpoint of a shareholder?

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Q: Discuss the meaning of the term principal-agent problem. Why

Discuss the meaning of the term principal-agent problem. Why does this problem exist?

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Q: Why may corporate managers not specifically aim at profit (or wealth

Why may corporate managers not specifically aim at profit (or wealth) maximization for their companies?

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