Governance Mechanisms Help Align the Incentives Between Principals and Agents

question 50

True/False

Governance mechanisms help align the incentives between principals and agents, and help monitor and control agents.

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Definitions:

Price Taker

A market participant that accepts prevailing prices as given, having no influence to alter the price of a good or service.

Marginal Revenue

The additional income from selling one more unit of a good; generally equal to the price of the good for perfectly competitive firms.

Differentiated Good

A Differentiated Good is a product or service that is distinct in some way from its competitors, whether through quality, features, branding, or customer service, allowing it to stand out in the marketplace.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, leading to some degree of market power while still taking the market price as given.