What Happens When the Process by Which Governance Develops Exhibits

question 5

Multiple Choice

What happens when the process by which governance develops exhibits path dependence?

• A)Governance arrangements split decision rights and controls between two related firms
• B)Governance arrangements are optimal
• C)Past circumstances could exclude certain possible governance arrangements in the future
• D)The firm will split into two entities to reduce the governance issues created
• E)The governance will form effectively

---

Definitions:

Optimal Consumption

The point at which a consumer maximizes their satisfaction or utility from consumption under their budget constraints.

Marginal Utility

Marginal utility is the additional satisfaction or utility that a consumer receives from consuming one more unit of a good or service.

Dollar Spent

A unit of expenditure, often used to discuss the impact or value of spending in terms of economic activity or investment.

Marginal Utility

The increase in satisfaction or useful value obtained from the consumption of yet another unit of a good or service.