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Question 1
Income tax payments are an example of ____.
implicit costs
explicit costs
normal return on investment
shareholder wealth
Question 2
The primary objective of a for-profit firm is to ___________.
maximize agency costs
minimize average cost
maximize total revenue
set output where total revenue equals total cost
maximize shareholder value
Question 3
To reduce Agency Problems, executive compensation should be designed to:
create incentives so that managers act like owners of the firm.
avoid making the executives own shares in the company.
be an increasing function of the firm’s expenses.
be an increasing function of the sales revenue received by the firm.
Question 4
Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT:
maximize total costs
maximize output, subject to a breakeven constraint
maximize the happiness of the administrators of the NFP enterprise
maximize the utility of the contributors
Question 5
Economic profit is defined as the difference between revenue and ____.
explicit cost
total economic cost
implicit cost
shareholder wealth