Which incentive scheme would simultaneously elicit accurate information about feasible plant production levels and motivate managers to perform up to potential (in the following schemes, B is the bonus payment, Q is actual plant output, and Qf is the
manager's estimate of feasible output)? A) B = 0.4Q
B) B = 0.4(Q - Qf)
C) B = 0.4Qf + 0.3(Q - Qf) if Q > Qf
D) B = 0.4Qf - 0.6(Q - Qf) if Q < Qf
E) B = 0.4Qf - 0.6(Q - Qf) if Q > Qf
Question 2
Refer to Scenario 8.2. The more elastic is demand for yachts,
A) the more Q will fall and the more P will rise.
B) the less Q will fall and the more P will rise.
C) the more Q will fall and the less P will rise.
D) the less Q will fall and the less P will rise.
E) the closer is the new equilibrium point to the old.
