Ray, a Manager in Fir Tree Inc

question 43

Multiple Choice

Ray, a manager in Fir Tree Inc., a large and established firm, must travel to attend an annual conference.He books the most convenient flight tickets and a room in a luxurious hotel right next to the venue of the conference.Ray justifies these decisions by stating that these are time-saving measures.Ray's decisions can be best explained ________.

• A)by the agency theory
• B)as bounded rationality
• C)through the Myers-Briggs test
• D)as organizational slack

---

Definitions:

Efficient Scale

The level of production at which a firm's average total costs are minimized.

Monopolistically Competitive

A market structure where many sellers offer products or services that are similar but not perfect substitutes, allowing for some degree of market power.

Product-variety Externality

The impact on consumer welfare or market efficiency due to variety in products available, often seen as a positive externality in markets.

Business-stealing Externality

A negative effect where a new entrant in a market draws customers from existing businesses, potentially harming those businesses without creating new value for the market as a whole.