Tournaments Can Tie Rewards More Closely to Actions That an Agent

question 108

Multiple Choice

Tournaments can tie rewards more closely to actions that an agent controls thereby:

• A) increasing effort and employee risk.
• B) reducing shirk and slack in the economy.
• C) improving productivity and employee pay.
• D) reducing productivity and employee pay..

---

Definitions:

Profit-maximizing Output

The level of production at which a firm achieves the highest profit, where marginal revenue equals marginal cost.

Marginal Cost

The expenditure required to produce an extra unit of a good or service.

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced.

Lawn-mowing

The process of cutting the grass in a lawn to maintain its appearance and health.