Backward Integration Is Effective in All of These Cases EXCEPT

question 100

Multiple Choice

Backward integration is effective in all of these cases EXCEPT

• A) when an organization competes in an industry that is growing rapidly.
• B) when an organization has both capital and human resources to manage the new business of supplying its own raw materials.
• C) when an organization needs to acquire a needed resource quickly.
• D) when the advantages of stable prices are not important.
• E) when present suppliers have high profit margins.

Understand the concept of moral hazard and its implications in various business contexts, including lending and insurance.

Identify the principal-agent problem in corporations and its consequences on company operations and objectives.

Calculate the expected loss in different scenarios involving risk management decisions, such as flood control or fire prevention.

Comprehend how moral hazard can be mitigated or eliminated through monitoring and adjusting insurance premiums.

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Definitions:

Primary Election

A preliminary election where voters decide their party’s candidates for a forthcoming general election.

Expected Number

The anticipated value in a probability distribution, representing the mean of a random variable.

Binomial Distribution

A probability distribution that summarizes the likelihood of a variable, which has only two possible outcomes, across a number of trials.

Normal Approximation

An approach in statistics for estimating the probability of different outcomes under the assumption that the data follow a normal distribution.