The Existence of a Performance Gap

question 30

Multiple Choice

The existence of a performance gap

• A) should cause management to question their objectives, strategies, and policies.
• B) is not an indicator of problems if it only happens once.
• C) is only the concern of top management because they set the original strategies.
• D) should cause management to look only within the organization to determine the problem.
• E) should signal the immediate need for a layoff.

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Definitions:

Allocative Efficiency

A state of resource allocation in which it is impossible to make any one individual better off without making at least one individual worse off.

Incentive Function

The role of rewards or penalties in motivating individuals or entities to behave in certain ways.

Rationing Function

The ability of market prices to allocate scarce resources among competing uses, ensuring that only those willing and able to pay the price can obtain the good or service.

Equilibrium Economic Rent

The additional income received by a factor of production, due to its scarcity or unique value, when the market is in equilibrium.