Which of the Following Is a Tool a Firm Can

question 14

Multiple Choice

Which of the following is a tool a firm can use to combat agency problems?

• A)Monitoring
• B)Performance-Based Incentives
• C)Bureaucracy
• D)a,b & c
• E)None of the above

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Definitions:

Optimal Short-Run Output

The level of production that maximizes profit or minimizes loss in the short term.

Market Price

The current price at which an asset or service can be bought or sold, determined by the supply and demand dynamics in the market.

Downward-Sloping Demand Curves

A graphical representation indicating that as the price of a good or service decreases, the quantity demanded increases, and vice versa.

Perfect Competition

A market structure characterized by a large number of small firms, identical products, and free entry and exit from the market.