A Managers Guide to Government in the Marketplace and Governments Role in
Market Competition & Social Economic Efficiency
Social economic efficiency - Exists when the goods & services that society desires are produced
& consumed with n
In a Uniform Distribution, all outcomes (of equal width) are equally likely. 12 3 6 9 12
We use the AREA. The total area was 1 or 1.00 or 100%; probability of a second hand being
between 12 and 3 was 25% of the area, hence a probabili
Types of Implicit Costs
The Role of Profits
Profits are a signal to resource holders where resources are most highly
valued by society.
Economics of Effective Management
A person who directs resources to achieve a stated goa
Employees go through three steps:
1. Determine ratio of inputs to work setting compared to outputs from work setting
2. Compare to ration to referent other
3. Act in ways tat obtain/maintain equity
THEORY 3: What are some examples of common
Compensation & Benefits
Compensation is the set of rewards provided to employees for their willingness to
perform their jobs
Benefits are rewards, incentives, and other things of value provided to employees
beyond salary and wage
What are the
Recruiting involves developing a pool of qualified and motivated applicants from
which the organization can select new employees
The most effective recruiting outcome occurs when applicant and organization
recruiting goals are aligned
METHOD 2: External recruiting seeks qualified and motivated individuals from outside the firm
o New ideas, talent, and connections
o Avoids ripple effect
o Low morale/motivation for internal employees
o Higher costs
Situation where one party to a contract takes a hidden action that benefits him or her at
the expense of another party.
The principal-agent problem.
Care taken with rental cars.
Market and Government Solutions
The characteristics of a market that influence how trading takes place
How many buyers and sellers?
Products: standardized or significantly different?
Barriers to entry/exit ?
Types of markets
A cost or benefit accruing to a third party external to the transaction
Too little is produced
Demand-side market failures
Too much is produced
Supply side market failures
Oligopolies display strategic pricing behavior
Incentive to cheat
Strategic pricing behavior refers to how a firms decisions are based on the actions and reactions
Mutual Interdependence each f