Lois Kent Has Owned and Managed the Operations of a Small

question 151

Essay

Lois Kent has owned and managed the operations of a small chain of sporting goods stores for the past two years.She has asked her administrative assistant to provide her with some annual reports of other companies that sell sporting goods as well as some published reports showing norms for the sporting goods industry so that Lois can compare the financial ratios of her company with those of other companies that sell sporting goods.Discuss the limitations of using comparisons with other companies and industry norms,which Lois needs to remember.

Evaluate the efficacy of various solutions to principal-agent problems, including monitoring and contract design.

Understand the concept of Arrow's impossibility theorem and its implications for social choice theory.

Recognize examples of common biases and errors in judgment and decision-making.

Understand the principles and outcomes of the ultimatum game in behavioral economics.

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Definitions:

FIFO System

A method of inventory valuation where goods first purchased or produced are the first to be sold or used, standing for "First In, First Out".

Investment Account

An account held at a financial institution that contains securities, cash, and other assets for investment purposes.

Subsidiary

A company that is controlled by another company, known as the parent company, through majority ownership.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.