Economic Theory Implies That the Incentive for a Manager of a Publicly

question 176

Multiple Choice

Economic theory implies that the incentive for a manager of a publicly operated firm (for example, a state university or the post office) to promote internal efficiency of their operations would be

• A) strong because inefficiency is easily detected and leads to the loss of voter support.
• B) strong because public officials are unconcerned about personal gain.
• C) weak because government employees are less educated than employees who work in the private sector.
• D) weak because it is difficult for voters to detect inefficiency and for public officials to gain from actions that would improve the efficiency of government.

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Definitions:

Compute

To calculate or determine by mathematical methods.

Compounded Semiannually

Interest calculated and added to the principal amount twice a year, leading to interest on interest.

Present Value

The worth at present of an upcoming monetary sum or flow of cash, given a predetermined return rate.

Maintenance Payments

Periodic payments made for the upkeep or support, often legally mandated in cases like alimony or child support.