All Else Equal, in Which of the Following Forms of Business

question 32

Multiple Choice

All else equal, in which of the following forms of business would the possibility of an agency problem be the greatest?

• A) A U.S. corporation in which individual stockholders own extremely small proportions of the company.
• B) A proprietorship in which the owner is actively managing the business operations.
• C) A partnership in which all the partners share management and decision-making responsibilities equally.
• D) A foreign corporation with concentrated ownership that is, relatively few owners.
• E) A U.S. corporation that gives company shares as incentives to its managers.

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Definitions:

Senior Citizens

Individuals of an older age, often defined by legal or social age thresholds, who may be eligible for certain benefits.

Hotel Chains

A series of hotels under the same brand or management, offering standardized accommodations and services across different locations.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, representing a measure of producer profitability.

Single-Price Monopoly

A market structure where a monopoly exists and sells a product for the same price to all customers without discrimination.