Question

Matching: Choose the best description, definition, or affiliation of the terms, concepts and people associated with those listed below.

1._____ cooperative firm                                                                         7. ______Charles Fourier

2._____Bob’s Red Barn                                                                             8. ______principal-agent relationship        

3. _____free ride                                                                                        9. ______residual claimant

4. _____Coase                                                                                             10.______utility

5. _____piece-rate work                                                                           11. ______employment rent

6. _____firm-specific asset                                                                       12. ______contract

a. a utopian

b. benefiting from the contributions of others to some cooperative project without contributing oneself.

c. a firm that is mostly or entirely owned by it workers, who hire and fire the managers   

d. the person who receives the income left over from a firm or other project after the payment of all contractual costs.

e. a numerical indicator of the value that one places on an outcome such that higher valued outcomes will be chosen over lower valued ones when both are feasible.

f. formerly taught at the University of Chicago

g. cost of a job loss.

h. something that a person owns or can do that has more value in the individual’s current firm than in their next best alternative.

i. Binding agreement or legal document stating the responsibilities of two or more parties.

j. the worker is paid a fixed amount for each unit of the product made.

k. a worker-owned company

l. when one party would like another party to act in some way

Answer 1

a. a utopian	7. Charles Fourier
b. benefiting from the contributions of others to some cooperative project without contributing oneself	3. free ride
c. a firm that is mostly or entirely owned by it workers, who hire and fire the managers	1. cooperative firm
d. the person who receives the income left over from a firm or other project after the payment of all contractual costs.	9. residual claimant
e. a numerical indicator of the value that one places on an outcome such that higher valued outcomes will be chosen over lower valued ones when both are feasible.	10. utility
f. formerly taught at the University of Chicago	4. Coase
g. cost of a job loss.	11. employment rent
h. something that a person owns or can do that has more value in the individual’s current firm than in their next best alternative.	6. firm-specific asset
i. Binding agreement or legal document stating the responsibilities of two or more parties.	12. contract
j. the worker is paid a fixed amount for each unit of the product made.	5. piece-rate work
k. a worker-owned company	2. Bob’s Red Barn
l. when one party would like another party to act in some way	8. principal-agent

explanation:

1. A cooperative firm is owned by the workers. They can hire and fire its managers.

2. Bob’s Red Barn is a company in Oregon, producing natural grains and baking mixes. It is an employee owned company.

3. Free ride is a problem where members who do not contribute towards an end also benefit out of it.

4. Ronald Coase was a British economist and author who worked as a Professor University of Chicago Law School.

5. Piece rate wok is where the employee is paid per every unit (piece) of work he does.

6. firm-specific asset is something of value in the current job. It may not hold the same value in some other job (next best alternative.)

7.Charles Fourier was a French philosopher and socialist thinker who is considered as one of the founders of social utopia.

8. Principal - agent relationship is the one where one person or party acts on behalf of another.

9. Residual claimant receives his payment after the settlement is done to all contractual parties like creditors, financial institutions, etc.

10. Utility is a concept which enables a person to place a number on the  satisfaction he derives from  the things that he consumes and to arrange them in such a way that he will consume the most satisfying things first, and proceed in the order of his next best utility.

11. Employment rent is a kind of economic rent that a person receives when the net value of his job exceeds that of his next best alternative of being without a job. Hence it is also called cost of a job loss.

12. A contract is a legal agreement that clearly states the duties and responsibilities of the parties. A breach of contract can be legally punishable.