The Managers at Movo Automobile Inc

question 2

Multiple Choice

The managers at Movo Automobile Inc.want to diversify their business by acquiring a consumer electronics company.This acquisition would mean increased job security,higher compensation,and greater decision-making authority for the managers.The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value.In this scenario,this acquisition by Movo Automobile is most likely a result of

• A) time compression diseconomies.
• B) experience-curve effects.
• C) principal-agent problems.
• D) resource ambiguity.

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Definitions:

Willing To Pay

The maximum amount a consumer is ready to spend on a good or service, reflecting the value they place on it.

Minimum Prices

A price floor set by the government, ensuring that goods and services cannot be sold below this level, typically to protect producers.

Demand-Side Market Failures

Underallocations of resources that occur when private demand curves understate consumers’ full willingness to pay for a good or service.

Supply Curve

Represents the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to supply to the market.