What Does Utility Analysis Help Managers Determine

question 32

Multiple Choice

What does utility analysis help managers determine?

• A) Which compensation level policy is most efficient
• B) Which compensation mix policy is most efficient
• C) The utility of different types of task behaviour
• D) Which managerial strategy will be most efficient for a firm

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Definitions:

External Benefits

The positive effects of a production or consumption activity on third parties who are not directly involved in the transaction.

Efficient Level

The optimal point of production or operation where resources are utilized in the most effective manner, without waste, to achieve a desired outcome or maximized benefit.

External Costs

Costs caused by a business activity that are not borne by the business itself, but by other people or the environment.

External Benefits

Benefits from an economic activity experienced by parties not directly involved in the transaction, often leading to positive spillovers in society.