The Use of Hierarchies Is Common in Modern Corporations

question 42

Multiple Choice

The use of hierarchies is common in modern corporations:

• A)because of the principle of comparative advantage.
• B)because of the principle of separation of decision management and decision control.
• C)to avoid collective-action problems.
• D)to enhance employee buy-in.

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Definitions:

Imperfect Information

A situation where all parties in an economic transaction do not have equal access to relevant information.

Marginal Benefit

Marginal benefit is the additional satisfaction or utility that a consumer receives from consuming one more unit of a good or service.

Marginal Cost

The growth in complete costs incurred by manufacturing an additional unit of a product or service.

Customer Satisfaction

The measure of how products or services meet or exceed customer expectations.