Which of the Following Is True About the Differences Between

question 11

Multiple Choice

Which of the following is true about the differences between M-form and U-form firms?

• A)As M-form firms are more diversified, it is more difficult for the management to acquire and compare information about products and locations than a U-form firm.
• B)A U-form firm can better incentivize managers than M-form firms.
• C)In an M-form firm the interests of executives in product or geographic divisions can be better aligned with those of shareholders compared to a U-form firm.
• D)M-form firms usually operate in fewer markets than U-form firms.

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Definitions:

Economic Rent

The excess payment made to a factor of production over and above what would be needed to keep it in its current use.

Marginal Revenue Product

The additional revenue generated from employing one more unit of input, such as labor or capital.

Primary Labor Market

The segment of the labor market that consists of high-paying jobs with good benefits and job security, often requiring higher education or specialized skills.

Economic Rent

The excess payment for a factor of production over its opportunity cost, highlighting the benefits received from a unique advantage or situation.