Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit

N14082-E1

A LEVEL 4 MODULE, SUMMER RESIT 2017-18

MANAGERIAL ECONOMICS

SECTION A 

1. Write brief answers explaining the nature and significance of each of the following concepts: 

a) Economies of scale

b) An executive stock option

c) The agency problem

d) An internal labour market

e) Asset specificity

f) Asymmetric information

SECTION B

2. How does management quality affect firm performance? What difficulties are there in measuring management, what approaches have been used to measure management? Does the evidence support the view that management matters? Use examples where necessary.

3.    Outline the adverse selection problem, using Akerlof’s lemons example, and explain how signaling might be used to overcome it.

4.    What are ‘transaction costs’? Explain, using examples, how a fall in transaction costs might stimulate outsourcing.

5. Compare the ‘rents capture’ and ‘optimal contracting’ views of executive compensation determination. How might you use empirical evidence to evaluate these approaches?

6. Explain the concept of an ‘efficiency wage’. Explain, using examples, the circumstances where would you expect to see efficiency wages being paid.

7. What is ‘moral hazard’? Discuss the view that moral hazard was the primary underlying cause of the 2008-11 global financial crisis. Credit will be given for the use of examples.