If High-Level Executives of a Company Award Themselves Sizable Bonuses

question 193

Multiple Choice

If high-level executives of a company award themselves sizable bonuses even though the firm they manage is making losses and performing poorly, this event is most likely to arise because of

• A) the law of diminishing marginal returns.
• B) competition among business firms for high-level executives.
• C) economies of scale.
• D) the principal-agent problem.

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Definitions:

Large Numbers

Numerical values that are significantly larger than those ordinarily used in everyday life, often involved in scientific, mathematical, or statistical contexts.

Uncultivated Fruit

Fruits that grow in the wild without human intervention for agricultural purposes.

Skins

The outer protective layer of the bodies of animals or humans, often referred to as the largest organ of the body.

Fiber

General term for indigestible plant material, typically complex carbohydrates such as cellulose.