The Problem of Production in Multi-Plant Firms with Asymmetric Information

question 113

Multiple Choice

The problem of production in multi-plant firms with asymmetric information can be solved by paying the manager:

• A) a piece rate, some constant amount per unit of output produced.
• B) a larger amount for each unit than was paid for the previous unit, to reflect increasing marginal cost.
• C) a smaller amount for each unit than was paid for the previous unit, to reflect decreasing marginal revenue.
• D) an annual bonus that increases with each unit of output up to capacity, and decreases with each unit of output past capacity.
• E) an annual bonus that is calculated decreases with each unit of output up to capacity, and increases with each unit of output past capacity.

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Definitions:

Brain Disorders

Conditions that impact the brain's structure and function, impairing mental processes and behaviors.

Sensory Receptors

Cells or structures specialized to detect changes in the environment and convey the information to the nervous system.

Ruffini End Organ

Receptor located deep in the dermis and responding to continuous touch or pressure. Named for Italian histologist Angelo Ruffini (1864–1929).

Pacinian Corpuscle

A type of mechanoreceptor found in the skin and various internal organs that detects pressure and vibration.