Which of the Following Key Factors Are Not Commonly Used

question 53

Multiple Choice

Which of the following key factors are not commonly used when deciding to opt for centralization or decentralization in purchasing? 

• A) Commonality of purchase requirements. 
• B) Geographic location. 
• C) Supply market structure. 
• D) Number of purchasing specialists.

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Definitions:

Moral-Hazard Problem

The moral-hazard problem arises in situations where one party's willingness to take risks is increased because the negative consequences of those risks will be borne by another party.

Principal-Agent Problem

A dilemma in economics where one party (agent) is supposed to act in the best interest of another (principal) but may have a tendency to act in their own interest.

Asymmetric Information

A situation in which one party in a transaction has more or superior information compared to the other.

Informational Asymmetry

A situation where one party in a transaction has more or better information compared to another, potentially leading to an imbalance in power or unfair transactions.