Business Economics Overview

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Questions and Answers

What is the main purpose of implementing an incentive mechanism in the principal-agent relationship?

To maximize the agent's control over decisions

To align the interests of the principal and agent (correct)

To reduce the principal's oversight costs

To increase the commission of the agent

Which of the following costs is NOT categorized as an agency cost?

Information costs (correct)

Oversight costs

Guarantee costs

Residual loss costs

Under the Resource-Based View of the firm, what characteristic of resources contributes to sustained competitive advantage?

Commonly used by multiple firms

Easily substitutable

Widely available in the market

Valuable and difficult to imitate (correct)

Which type of firm is characterized by owning resources that are both public and private?

Mixed equity firm Signup and view all the answers

What is a primary characteristic of industrial firms?

They produce or extract goods. Signup and view all the answers

What legal form allows for a business to be treated as a separate entity from its owners?

Corporation Signup and view all the answers

What type of firm would likely have a turnover of less than €2 million?

Micro firm Signup and view all the answers

Which of the following is NOT a type of ownership classification for firms?

Service-oriented Signup and view all the answers

What is a primary characteristic that differentiates firms from other organizations?

Firms seek to maximize profit through goods or services. Signup and view all the answers

Which theory describes the firm as a 'black box' focused on maximizing profit?

Neoclassical Theory Signup and view all the answers

Under which condition should a firm choose to make a product instead of buying it, according to Transaction Cost Theory?

When transaction costs are high. Signup and view all the answers

What negative impact does disproportionate income inequality have on society?

It reduces the potential for economic growth. Signup and view all the answers

According to Agency Theory, how is the firm conceptualized?

As a nexus of contracts between various parties. Signup and view all the answers

What factors contribute to the existence of transaction costs as per Transaction Cost Theory?

Bounded rationality and opportunism. Signup and view all the answers

Which of the following describes a key function of firms in the economic reality context?

Creating value by transforming raw materials into outputs. Signup and view all the answers

What is a consequence of high unemployment in relation to social cohesion?

It reduces social cohesion. Signup and view all the answers

Study Notes

Course Information

Course title: Business Economics
Instructor: María Espadas Puyet
Institution: CUNEF Universidad
Course code: DADE-C

Unit 1: The Firm
- Nature of the firm
- Types of firms
- Ownership and management
- Entrepreneurship
Unit 2: Theoretical Approaches to Management
- Classical approach
- Scientific Management
- General Administrative Theory
- Behavioural Approach
Unit 3: Business Environment
- General environment (PESTEL)
- Competitive environment
- Porter's Five Forces
- Organizational culture
Unit 4: Information and Decision Making
- Information and data
- Decision making
- Decision making approaches
- Information system and management
Unit 5: Business Management
- Business administrators and managers
- Nature of manager's job
- Management functions
Unit 6: Objectives and Growth of the Firm
- Economic goal and value creation (accounting profit, economic profit)
- Social responsibility, sustainability, and ethics
- The growth of the firm
- Innovation

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Description

This quiz covers key concepts in Business Economics, including the nature of firms, various management theories, and the business environment. Test your understanding of entrepreneurship, decision-making, and the objectives of firms. Ideal for students enrolled in the Business Economics course at CUNEF Universidad.