Managers in a Firm Hired to Improve the Firm's Profitability

question 5

Multiple Choice

Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests. What does this best illustrate?

• A) diseconomies of scale
• B) principal-agent problem
• C) experience-curve effects
• D) information asymmetries

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Definitions:

Terminal Response

In the context of psychology, this refers to the final behavior or action that occurs at the end of a behavioral sequence, often in response to conditioning or therapy.

Approximation

A technique in mathematics and statistics used to find close but not exact answers, or a process in behaviorism to successively refine behaviors towards a target.

Behavior Therapy

A therapy based on the principles of behaviorism, focusing on modifying problematic behaviors and learning new coping mechanisms.

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome, often reflecting a reaction to stress.