Megan Is a Graduate Student Pursuing a Course in Business

question 54

Multiple Choice

Megan is a graduate student pursuing a course in business. Presented with the case of a company's unethical behavior, Megan wonders if the company's board of directors should ask the CEO to step down. Having a strong belief in Michael Porter's idea of value creation, Megan is most likely to conclude that company's board of directors

• A) should not ask the CEO to step down because doing so would cause a profit dip that would affect its shareholders.
• B) should ask the CEO to step down because it has a greater obligation toward society.
• C) should not ask the CEO to step down because he was responsible for an almost 90 percent appreciation of the company's stock.
• D) should ask the CEO to step down because agents, unlike principals, are disposable.

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Definitions:

Profitable

A financial status indicating that revenues exceed the costs and expenses associated with operating a business.

Profit-Maximizing Level

The output level at which a firm achieves the highest possible profit, where marginal cost equals marginal revenue.

Market Price

The current price at which an asset or service can be bought or sold.