Goal-Congruence Problems May Occur When an Inconsistency Evolves Between the Decision

question 138

True/False

Goal-congruence problems may occur when an inconsistency evolves between the decision model used and the model used to evaluate the performance of the person implementing the decision.

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Definitions:

Rival in Consumption

A characteristic of a good where its consumption by one person reduces its availability for another person.

Substitutes

Goods or services that can replace each other in use or consumption, where an increase in the price of one leads to an increase in demand for the other.

Nonrival in Consumption

Nonrival in Consumption describes a good where one individual's consumption does not reduce availability to others, such as a public broadcast.

Efficient Price

Price level at which the quantity demanded and supplied in a market are at equilibrium, leading to an optimal distribution of resources.