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Economics Questions Essay

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Economic questions

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Economic Questions

  1. High- powered incentives

      High-powered incentives are compensation means systems which are guided by the output of employee rather than by input. Currently, mostly of the companies in the Fortune 500 are practicing it by offering their senior executives stock option and other non salary compensation such as bonuses. These in some cases are accounting for more than half of the executive packages. High-powered incentives are offered to employees with a key reason of holding the employees’ efforts to the required results of the company. High-powered incentives can have negative effects because the contracts cannot state all the behavior of employees; they may take unexpected actions to increase their compensation (Larkin, 2006).

      1 b

      High-powered incentives are rewards or compensations offered to employees if they meet or exceed their target. Yes, when the

      1c

      Question 2

      The plan is good and is likely to motivate the staffs of Asphalt Acres to work better. However this concept of high powered incentives has been misused in some places where some engineers request to service a machine that does not deserve so. So my advice to Auto Engineering is that they should employ very effective systems to monitor when machines are being brought for servicing and at the same objective personnel to handle accounting and billing. These should be subject to auditing at any time.

      Question

    a. Externalities refers to situations when the effect of production or consumption of goods and services imposes costs or benefits on others which are not shown in the prices charged for the goods and services that are being offered.

      Question 6

    a. Fisher equation and its importance; the Fisher Equation act like the connections between nominal and real interest rates. In...

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