1. Which of the following methods could be used by an employer to align the incentives of an employee with its own interests?

Answer Paying market wages Paying efficiency wages Signaling Partially outsourcing human resource functions 2 points

Question 2
1. Influence cost is a type of _____ incurred while filling positions that have similar responsibilities but carry different pay. Answer deadweight loss opportunity cost externality social cost 2 points

Question 3
1. _____ allow an individual to buy a companys stock at a pre-determined price on or after a certain future date. Answer Arbitrage Futures contracts Options

Spot markets 2 points

Question 4
1. Which of the following will have a downward impact on efficiency wages? Answer Low monitoring costs Excess supply in the labor market High equilibrium wage rate Excess demand in the labor market 2 points

Question 5
1. Jason is a salesman who gets 40 percent of the revenue he generates for his company. This is an example of payment by _____. Answer piece rent fixed salary executive compensation share contract 2 points

Question 6
1. In competitive markets, the elasticity of labor supply is:

Answer unrelated to time. inversely proportional to time elapsed since a wage change. unity. directly proportional to time elapsed since a wage change. 2 points

Question 7
1. In long-term job attachments, a workers wage: Answer always exceeds his productivity. always falls below his productivity. is lower than his productivity at the beginning, then equals it, and then exceeds the same. is higher than his productivity at the beginning, then equals it, and then falls below the same. 2 points

Question 8
1. Which of the following events will cause a downward movement along the value of marginal product of labor curve? Answer An increase in wage rate An increase in price of the product A decrease in wage rate A decrease in price of the product

2 points

Question 9
1. Which of the following assumptions is made while determining equilibrium wage and labor employed in the economy? Answer Information about job vacancies is difficult to obtain for workers. Mobility of workers is limited, i.e., workers can not switch jobs easily. Jobs vary widely in scope and responsibilities. All person-hours of labor are treated as identical. 2 points

Question 10
1. A written contract between an employer and an employee creates value as long as: Answer the benefits exceed the costs of forming and enforcing it. the productivity of the employee is equivalent to the wage. on-the-job learning is unimportant. the relationship between the employer and the employee is short-term. 2 points

Question 11
1. Piece rates are used when: Answer

an individuals output is independent of others and can be easily measured. the job involves team production. an individuals output can be affected by random events. monitoring is difficult. 2 points

Question 12
1. _____ is an example of specific human capital. Answer High school education A bachelors degree in Economics On-the-job learning for a sales executive A PhD in astrophysics 2 points

Question 13
1. A firm that fills its vacancies in the upper levels of the hierarchy with its own employees: Answer avoids opportunistic behavior by employees. uses an internal labor market. avoids the difficult tasks of measuring and comparing the productivities of individual workers. pays them according to their performance rather than seniority. 2 points

Question 14

1. The country of Zorabia witnesses a huge influx of unskilled illegal immigrants. Which of the following will occur? Answer The equilibrium wage rate in Zorabia will fall. The equilibrium wage rate in the market for unskilled labor in Zorabia will fall. There will be excess demand for labor in the market for unskilled labor in Zorabia. There will be excess supply of labor in the job market for skilled workers. 2 points

Question 15
1. A competitive firm hires workers as long as: Answer marginal product of labor is positive. value of marginal product of labor is positive. marginal product of labor is greater than the wage rate. value of marginal product of labor is greater than the wage rate. 2 points

Question 16
1. If two investments, X and Y, have the same expected return an individual investor would prefer: Answer the one with a higher standard deviation. the one with a higher mean.

the one with a lower correlation coefficient. the one with a lower variance. 2 points

Question 17
1. A(n) _____ is a set of equal annual payments received by an investor from the investment. Answer perpetuity annuity interest capital value 2 points

Question 18
1. Refer to Figure 16-1. The conditional probability Pr[A/B] will be: In the figure given below A and B are two sets, such that Pr[A and B]=1/3, Pr[A]=2/4, Pr[B]=3/4. Figure 16-1

Answer 4/9. 2/9. 4/6. 2/6. 2 points

Question 19
1. If A and B are two disjoint sets, and Pr represents the probability, then Pr[A or B] will be: Answer unity. zero. Pr[A]+Pr[B]. Pr[A]-Pr[B]. 2 points

Question 20
1. A situation in which an individual has no information about probabilities and the underlying distributions of the possible outcomes of an investment choice is called: Answer a prior distribution. updating. risk tolerance. pure uncertainty. 2 points

Question 21
1. A loan used as an investment turns out to be profitable if the sale price of its output covers the _____ of all other inputs and interest on the funds loaned. Answer

internal costs marginal cost opportunity cost average cost 2 points

Question 22
1. If events A and B are independent, then Pr[A and B] will be: Answer Pr[A]Pr[B]. Pr[A]Pr[B]. Pr[A]+Pr[B]. Pr[A]Pr[B]. 2 points

Question 23
1. A _____ is a combination of an annuity that consists of coupon payments and a terminal payment of the par value. Answer share bond perpetuity debenture 2 points

Question 24

1. The expectation of a random variable X that can take on any of N possible values, Xi with probability Pr[Xi], is denoted as E[X] and defined as: Answer E[X]=+XiPr[Xi]. E[X]=XiPr[Xi]. E[X]=XiPr[Xi]. E[X]=XiPr[Xi]. 2 points

Question 25
1. Which of the following properties can be associated with an indifference curve of a riskaverse investor? Answer Indifference curve for a risk-averse investor is a vertical line parallel to the variance axis. Two indifference curves can intersect at the equilibrium combination of risk and return. An indifference curve closer to the expected return axis gives a better utility than the one farther away. Indifference curve for a risk-averse investor is always downward sloping. 2 points

Question 26
1. Which of the following is a characteristic of a real option? Answer The call option on a stock exercised if some average of the prices of its components

passes a critical level. The right to postpone construction on the basis of net present value calculation. The put option on a stock that need to be paid for (at a predetermined price) if they are actually exercised. The right to sell an option at the strike price. 2 points

Question 27
1. A risky borrower can pay a lower interest rate if: Answer she invests the amount in a profitable business. she can assure the lender of a low inflation rate. she makes a promise to repay within a short interval. she can arrange for a collateral. 2 points

Question 28
1. A derivative is any financial instrument whose value depends on the: Answer extent of asset diversification. expected rate of inflation. purchasing power of the people. value of an underlying asset. 2 points

Question 29

1. Jeff holds $50,000 wealth which has a utility of 7.07 utils (assuming utility is the square root of wealth in thousand dollars). He considers investing this in a gamble which has a 0.6 probability of increasing his total wealth to $100,000 and 0.4 probability of decreasing it to $30,000. What will be Jeffs expected utility from the gamble? Answer 15 utils 8.19 utils 3.2 utils 12.12 utils 2 points

Question 30
1. Which of the following strategies are adopted by a business tycoon when the first new management of the purchased company fails? Answer He tries a second management team. He tries to train and motivate the existing management team. He sells off part of the company in the market. He tries to reduce the cost of production by lowering output. 2 points

Save and Submit

Save and Submit

Links to Test Questions and Answers Read question 1 Read answers for question 1 Read question 2 Read answers for question 2 Read question 3 Read answers for question 3 Read question 4 Read answers for question 4 Read question 5 Read answers for question 5 Read question 6 Read answers for question 6 Read question 7 Read answers for question 7 Read question 8 Read

_27274759_1

_27274759_1

notnull

answers for question 8 Read question 9 Read answers for question 9 Read question 10 Read answers for question 10 Read question 11 Read answers for question 11 Read question 12 Read answers for question 12 Read question 13 Read answers for question 13 Read question 14 Read answers for question 14 Read question 15 Read answers for question 15 Read question 16 Read answers for question 16 Read question 17 Read answers for question 17 Read question 18 Read answers for question 18 Read question 19 Read answers for question 19 Read question 20 Read answers for question 20 Read question 21 Read answers for question 21 Read question 22 Read answers for question 22 Read question 23 Read answers for question 23 Read question 24 Read answers for question 24 Read question 25 Read answers for question 25 Read question 26 Read answers for question 26 Read question 27 Read answers for question 27 Read question 28 Read answers for question 28 Read question 29 Read answers for question 29 Read question 30 Read answers for question 30