Several Members of the Board of Directors of American Textile

question 57

Multiple Choice

Several members of the Board of Directors of American Textile Products (ATP) have proposed creating the position of lead director. What circumstances would most likely have initiated this proposal?

• A) ATP has been the initiator of several hostile takeovers in the last 2 years.
• B) The Board has been successful in reducing the percentage of CEO pay that is composed of stock options.
• C) The CEO/chairperson of the Board has been suspected of opportunistic behavior.
• D) The firm is traded on the New York Stock Exchange and must change its corporate governance to comply with the NYSE's new rules.

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Definitions:

Marginal Costs

The extra cost incurred for producing one additional unit of a product or service.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, often illustrated by the area above the supply curve and below the market price.

Profit Maximizing

The process of identifying the best price and production level that leads to the highest profit for a business, considering costs and demand.

Marginal Cost Curve

A graph that shows the change in the cost of producing one additional unit of a good or service, typically sloping upwards as output increases.