Mitch Is a Director and Officer of Numero Uno, Inc

question 52

Essay

Mitch is a director and officer of Numero Uno, Inc. Mitch makes a decision to select a new supplier that results in an increase in costs for Numero Uno and its shareholders. In addition, the Numero Uno board considers a contract to outsource all of the custodial work for the firm with One-of-a-Kind Corporation. Mitch is a director and shareholder of One-of-a-Kind. If the shareholders accuse Mitch of breaching his fiduciary duty to the corporation for the loss on the supplier contract, what is Mitch's best defense? With regard to the One-of-a-Kind contract, what is Mitch's responsibility in this situation?

---

Definitions:

Monopolistic Competitor

A market structure where many firms sell products that are similar but not identical, thereby having some control over their prices.

Represent

To be a sign or symbol of something; or to act on behalf of someone or something in a legal or formal context.

Monopolistically Competitive Firms

Monopolistically competitive firms operate in a market structure where many companies sell products that are similar but not identical, leading to some degree of market power.

Long-Run Equilibrium

The intersection of the AD and LRAS curves, when wages and prices have adjusted to their final equilibrium levels.