Which of These Results from the Separation of Ownership and Management

question 5

Multiple Choice

Which of these results from the separation of ownership and management in large publicly traded corporations?

• A)Corporate managers have stronger incentives to rather quickly transfer control of the firm to less informed management teams.
• B)Corporate managers have weaker incentives to transfer control of the firm to less informed management teams.
• C)Corporate managers have stronger incentives to rather quickly transfer control of the firm to more informed management teams.
• D)Corporate managers have weaker incentives to transfer control of the firm to more informed management teams.

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Definitions:

Equilibrium Price

The price at which the quantity of goods suppliers are willing to sell equals the quantity of goods consumers are willing to buy, leading to market balance.

Competitive Labor Market

A market where numerous employers and employees interact, leading to wage determination by supply and demand with minimal intervention.

Shirking

is the behavior of avoiding or evading work and responsibilities, often leading to reduced productivity within an employment context.

Efficiency Wage

A wage rate paid by employers that is above the market equilibrium to increase worker productivity and efficiency.