Assume a Firm Is Run as a Zero-Profit Enterprise

question 88

Multiple Choice

Assume a firm is run as a zero-profit enterprise.Which of the following would be TRUE?

• A) There is a higher probability that wage reductions would outweigh layoffs.
• B) Those in charge would not act any different than regular owners, there would still be layoffs.
• C) Those not in charge would remain risk neutral.
• D) Wage reductions would be lower than they would be if the firm was run for profit.

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Definitions:

Express Condition

A condition specifically and explicitly stated in a contract and usually preceded by words such as conditioned on, if, provided that, or when.

Equitable Relief

A type of legal remedy, including injunctions or specific performance, that requires a party to act or refrain from acting, rather than to pay damages.

Irreparable Harm

Damage or injury that cannot be adequately remedied by money damages and therefore often justifies a court's granting of injunctive relief.

Materially Breached

Pertaining to a serious violation or failure to perform one’s duties under a contract that justifies the other party's right to terminate the agreement.