A Subsidiary Differs from a Branch in That a Subsidiary

question 57

Multiple Choice

A subsidiary differs from a branch in that a subsidiary ________.

• A) is just a unit or a part of the parent with no separate legal status
• B) is a co-parent company
• C) is considered an agent of the parent company governed by an agency contract, but not owned by the company
• D) is a company organized as a separate legal entity that is owned by the parent

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Definitions:

Efficiency Wages

Efficiency wages refer to the concept where employers pay higher than the market-clearing wage to increase productivity, reduce turnover, and encourage loyalty among employees.

Labor Force Turnover

The rate at which employees leave a company and are replaced by new employees.

Labor Productivity

Average product of labor for an entire industry or for the economy as a whole.

No Shirking Constraint

A principle in labor economics that suggests wages are set to deter employees from shirking or underperforming.