In an Economy in Which Decisions Are Guided by Prices

question 21

Multiple Choice

In an economy in which decisions are guided by prices and individual self-interest,there is

• A)the potential to achieve efficiency in production.
• B)a strong need for government intervention in the market.
• C)less efficiency than would be observed in a centrally-planned economy.
• D)more need for a strong legal system to control individual greed than would be needed in a centrally-planned economy.

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Definitions:

Labor Costs

The total sum of all wages, benefits, and taxes that an employer incurs in compensation for the work performed by employees.

Strategic Decision Making

The process of making choices by identifying priorities, alternatives, and potential impacts, often under conditions of uncertainty, to achieve strategic goals.

Top Managers

Senior executives who are responsible for the overall direction and success of the entire organization.

Normative Decision Model

A framework that suggests leaders determine the appropriate amount of employee participation based on specific situational variables.