Managerial Economics

Textbooks:
Brickley, J., Smith, C., & Zimmerman, J. (2009). Managerial economics and organizational architecture (5th ed.). New York: McGraw Hill/Irwin. ISBN: 978-0-07-337582-3.

MBA 540 Final Exam

1. (10 pts.) Discuss how organizational architecture and corporate culture are related. Use an example of a real-life firm and discuss how its corporate culture blends

with its organizational architecture.

2. (10 pts.) Billy Riggan is in charge of all technical developments at Always Round Tire. He makes all the choices concerning product innovations in the company. He

finds that he is overworked and that several of his research scientists seem to be spending work hours playing tennis. What is going on?

3. (10 pts.) Always Round Tire tries to base its promotions on seniority (where education and training requirements are not necessary). The company finds that this

system seems to work most of the time with shop floor supervisors and team managers. But the system breaks down for higher-level positions. Why?

4. (10 pts.) Economists believe the free rider problem is very important in complex business organizational structures. Still, businesses continue to build teams to

solve problems or to deliver products to consumers. Often special rewards or bonuses are provided to the team rather than to the individuals on the team. Write a brief

essay that either defends the economists’ concern or explain why economists are wrong on this issue.

5. (10 pts.) Many firms today use 360-degree performance evaluations. Make a case for this type of evaluation based on the informativeness principle. What problems may

be encountered from implementation of such a system?

6. (10 pts.) Reflecting on what you have learned in this course, discuss the relevance of Responsible Stewardship in the context of economic analysis and

organizational architecture.

This is my final exam*** I really do need an A on this paper. Please use proper grammar and some of the following economics terminology:
Ratchet effect
Relative performance evaluation
Subjective performance evaluation
Objective performance evaluation
Reservation utilities
Human capital
Compensating wage differential
Explicit contracts
Internal labor market
Implicit contracts
Efficiency wages
Fringe benefits
Optimal risk sharing
Risk aversion
Principal-agent model
Incentive compensation
Informativeness principle
Centralization
Decentralization
Empowerment
Influence activities and costs
Specialized task assignment
Broad task assignment
U-form organizations
M-form organizations
Matrix organizations