In Order for Corporate Diversification to Be Economically Valuable There

question 3

True/False

In order for corporate diversification to be economically valuable there must either be some valuable economy of scope among the multiple businesses in which a firm is operating or it must be less costly for managers in a firm to realize these economies of scope than for an outside equity holder on his or her own.

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Definitions:

Internal Morality

The set of moral principles that guide an individual's actions, developed independently of external rules or laws.

Conscience

A component of the superego that contains behaviors for which the child has been punished.

Primary-process Thought

A Freudian concept involving primitive, instinctual thought patterns that are illogical and driven by the unconscious mind.

Ego

In psychoanalytic theory, the part of the mind that mediates between the conscious and the unconscious and is responsible for reality testing and a sense of personal identity.