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The Planner's Blueprint: An Unintended Use of a Market Model
Analyze the paradoxical role of the general equilibrium model, originally developed to describe a system of interconnected competitive markets, in the arguments for a centrally planned economy during the early 20th century. In your response, explain which specific features of this mathematical framework made it appealing to advocates of central planning, despite its market-based origins.
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CORE Econ
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.6 The firm and its employees - The Economy 2.0 Microeconomics @ CORE Econ
Analysis in Bloom's Taxonomy
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The Planner's Blueprint: An Unintended Use of a Market Model
The Prestige Project
A firm's board of directors is reviewing several recent decisions made by its top executives. Which of the following actions is least likely to be categorized as a manager acting in their own self-interest at the expense of the owners?
A CEO of a publicly-traded company decides to acquire a smaller, trendy startup. The acquisition is very expensive, and financial analysts are skeptical about its potential to be profitable. However, the deal generates significant positive media attention for the CEO, who is featured on the cover of several business magazines. Which of the following best explains the CEO's decision from the perspective of the firm's owners?
Match each example of a manager's action to the specific type of self-interested behavior it best represents.
The 'Use It or Lose It' Budget
A manager who authorizes significant spending on employee training programs and upgraded office technology is necessarily acting out of self-interest to enhance their own prestige and work environment, at the expense of the firm's owners.
The Lavish Leader's Ledger
Assessing the Damage: Shareholder Impact of Managerial Actions
A divisional manager at a large corporation rejects a project with a projected 20% return on investment that would require minimal new resources. Instead, she champions and secures approval for a different project with a projected 12% return on investment. This approved project, however, will double the size of her division's staff and budget, significantly raising her profile within the company. Which of the following best analyzes the manager's decision in the context of potential conflicts between owner and manager interests?
A CEO of a publicly-traded company decides to acquire a smaller, trendy startup. The acquisition is very expensive, and financial analysts are skeptical about its potential to be profitable. However, the deal generates significant positive media attention for the CEO, who is featured on the cover of several business magazines. Which of the following best explains the CEO's decision from the perspective of the firm's owners?