Below are various statements about different budgeting techniques. Which is false? Budget ratcheting tightens targets when performance fails to meet the target by a predetermined percentage Budget lapsing prevents managers from hoarding funds Master(static) budgets are prepared for a single level of activity Budget lapsing encourages managers to spend money regardless of cost or value None of the above

Below are various statements about different budgeting techniques. Which is false? Budget ratcheting tightens targets when performance fails to meet the target by a predetermined percentage Budget lapsing prevents managers from hoarding funds Master(static) budgets are prepared for a single level of activity Budget lapsing encourages managers to spend money regardless of cost or value None of the above

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 17.6IP

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Action No Recycling Recycling (Dollars) 1,800 1,100 (Dollars) 1,500 2,600 Total economic profit is highest when the recycling production method is (Dollars) When the chemical lab uses the recycling method, the water park earns $2,600 – $1,500 = $1,100 more per week than it does with no recycling. Therefore, the water park should be willing to pay up to $1,100 per week for the chemical lab to recycle water. However, the recycling method decreases the chemical lab's economic profit by $1,800 – $1,100 = $700 per week. Therefore, the chemical lab should be willing to use the recycling method if it is compensated with at least $700 per week. Suppose the water park has the property rights to the lake. That is, the water park has the right to a clean (unpolluted) lake. In this case, assuming the two firms can bargain at no cost, the chemical lab will the recycling method and will pay the water park per week. Now, suppose the chemical lab has the property rights to the lake, including the…