Explain Why an Organization May Choose to Decentralize Authority

question 56

Essay

Explain why an organization may choose to decentralize authority. What are some possible downsides to this approach?

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Definitions:

Utility Function

A mathematical representation of an individual's preference ordering over a set of goods or outcomes.

Income

The financial gain earned or received by an individual or entity, usually through work, investments, or business operations.

Nuts

Hard-shelled seeds of certain plants that are edible and often rich in nutrients such as fats, proteins, and carbohydrates.

Homothetic Preferences

Preferences where if a consumer prefers a bundle of goods A to B, they will also prefer a proportional scaling of A to the same proportional scaling of B, indicating consistent patterns of consumption regardless of income level.