Companies Should Tolerate, and Even Encourage, Informal Efforts in Which

question 61

Multiple Choice

Companies should tolerate, and even encourage, informal efforts in which employees work to create new products and processes of their own choosing and initiative. Such efforts are known as

• A) bootlegging.
• B) entrepreneurial orientation.
• C) competitive aggressiveness.
• D) risk-taking.
• E) horse trading.

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Definitions:

Economic Profits

The surplus or profit earned by a firm over and above the total costs of production, including both explicit and implicit costs, signifying an above-normal return.

Accounting Profits

The financial gain calculated by subtracting total explicit costs from total revenue, using generally accepted accounting principles (GAAP).

Perfectly Competitive Industry

This refers to a market structure where numerous small firms compete against each other with no single company dominating the market, selling identical products, and having easy market entry and exit.

Perfectly Competitive Firm

A business that operates in a market where there are many buyers and sellers, the products are homogeneous, and there are no barriers to entry or exit.