_____ Is Most Likely to Be a Free Rider

question 27

Multiple Choice

_____ is most likely to be a free rider.

• A) A managing director of a ?rm, who also owns a substantial percentage of the ?rm's stocks
• B) A manager whose pay is linked to the pro?ts earned by the company
• C) An employee who is compensated solely on the basis of his team's aggregate performance
• D) A factory worker whose daily work can be easily monitored

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Definitions:

Equity

Ownership interest in a company, often represented by stocks, giving shareholders a claim on assets and earnings.

Credit Purchases

Transactions where goods, services, or assets are bought with the promise of future payment, often involving interest charges over time.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Inventories

The raw materials, work-in-process products, and finished goods considered part of a business's assets that are ready or will be ready for sale.