Econ Hm1

Chapter I 2. To mitigate agency problems between senior executives and shareholders, the compensation committee of the board should devote more to long term incentives; the idea is to align the pocketbook interests of managers directly with those of stockholders, and the reason is to motive a manager and make him or her to act in the interests of the firm's stockholders depends on the structure of his or her compensation package, the threat of dismissal, and the threat of takeover by a new group of owner. 3. Yes, I would to trigger executive bonuses for that year by requiring professional managers and directors to own a substantial amount of company stock because that will imply long run oriented and dynamic strategies to anticipate change in a risky environment and success. 6. A major technological breakthrough is achieved by the firm, reducing its costs of production. It is the expected impact on the value of the firm, for the new technology leads a company to save and minimize the cost of the production and stay competitive in the market.

Chapter II 1. If the price for hybrid gasoline-electric vehicles were $35000, people would purchase100 vehicles per month, and if the price for hybrid gasoline-electric vehicles were $55000, people would purchase just 50 per month.
*An increase in the price of Chevy Volt will result an increase in the quantity demanded of Toyota Prius.
*An increase in the price of lithium ion laptop computer batteries will result a decrease in the quantity demanded of Toyota Prius.
*An increase in consumer income levels will result an increase in the quantity demanded of gasoline cars.
*An increase in the amount of advertising and marketing expenditures will increase the quantity demanded of Toyota Prius.
* An increase in level of advertising and marketing by Chevrolet will decrease the quantity demanded of Toyota Prius.
*An increase in the population will result an increase in the quantity demanded of Toyota Prius.
*An