The Problem of Asymmetric Information in Multi-Plant Firms Involves

question 85

Multiple Choice

The problem of asymmetric information in multi-plant firms involves:

• A) only the problem of how to get managers to produce as much as possible.
• B) only the problem of how to get managers to produce the amount the larger firm wants them to, whether it be a lot or a little.
• C) both the problem of how to get managers to produce the appropriate amount and the problem of how to get them to accurately report their capacity.
• D) both the problem of how to get managers to produce the appropriate amount and the problem of how to get them to not sell that output outside of the firm.
• E) both the problems of vertical and horizontal integration with the rest of the firm.

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Definitions:

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