What Institution Within a Firm Must Fail on Some Level

question 32

Multiple Choice

What institution within a firm must fail on some level for managers to be motivated to acquire another firm for the purposes of increasing their own compensation,shielding themselves against risk,or gaining prominence by running a larger firm?

• A)Legal department
• B)Corporate board
• C)Mergers and acquisitions program
• D)Firm bonus schedule
• E)Corporate governance

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Definitions:

Economies of Scale

The cost advantage achieved when production becomes efficient, leading to a decrease in the per-unit cost as the volume of production increases.

Autarky

A situation where a country or economy operates in total self-sufficiency, without engaging in international trade.

Production Possibilities

The different quantities of various goods and services that an economy can produce with given resources and technology.

Equilibrium

A state in which market supply and demand balance each other, and as a result, prices become stable.