Do not post on Website Please
CH
6: The Organization of the Firm
Answer and analyze the
following questions in chapter 6: 2, 6, 8, and 19.
2. Discuss the optimal method for procuring a
modest number of standardized inputs that are sold by many firms in the
marketplace.What are the promary
advantages and disadvantages of using this method to acquire inputs?Give an example that uses this method of
procurement.
6. Describe how a manager who derives
satisfaction from both income and shirking allocates a 10-hour day between
these activities when paid an annual, fixed salary of $125,000.When this same manager is given an annual
firxed salary of $125,000 and 3 percent of the firm’s profits—amounting to
$150,ooo per year—the manager chooses to work seven hours and shirks for three
hours.Explain which of the compensation
schemes the manager prefers.
8.. Discuss the impact of the following
factors on the optimal method of procurring an input.
a. Benefits
from specialization
b. Bureaucracy
costs
c. Opportunism
on either side of the transaction
d. Specialized
investments
e.
Unspecifiable events
f. Bargaining
costs
19. Last year, a 10-year contract between
Boeing Commercial Airplane Group (BCAG) and Thyssen Inc.—a distributor of raw
aluminum—expired.The contract, valued
at $300 million when intially signed, stemmed from Boeing’s desire in late
1990s to reduce production bottlenecks resulting from supply shortages.Declines in the demand for commercial
aircraft during the past decade led some analysts to challenge BCAG’s wisdom in
signing such a long-term contract.Do
you share this view?Explain.