The Board of Directors Has the Power to Act on Behalf

question 148

True/False

The board of directors has the power to act on behalf of the shareholders to hire and fire the operating management of the firm. In a legal sense, the directors are "principals" and the shareholders are "agents".

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Definitions:

Economic Power

The ability of an entity or country to influence or control economic activities, including production, trade, and consumption.

Political Power

Political power is the capacity or ability of a political entity, such as a state or government, to control or influence the behavior of individuals and organizations within a society.

Natural Monopolies

Industries where a single firm can supply a good or service to an entire market at a lower cost than would be possible if there were multiple firms.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, typically characterized by a reduction in costs per unit.