In Theory

question 82

Multiple Choice

In theory,

• A)managers are hired by the shareholders at the annual stockholders meeting. If the managers turn in a bad year, new ones get hired.
• B)shareholders hire the managers to oversee the board of directors.
• C)managers are hired by the board of directors; the board is accountable to the shareholders.
• D)none of the above

Analyze the consequences of vertical and horizontal contracts on market dynamics and pricing.

Comprehend the antitrust risks and enforcement related to vertical and horizontal relationships.

Examine the strategic considerations in acquiring suppliers or customers to enhance profitability.

Explore the concept of synergetic value in mergers and acquisitions.

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Definitions:

Constant-Cost Industry

An industry where the costs of production do not change as the industry's output changes.

Long-Run Equilibrium

A state in economic theory where all factors of production are fully adjustable, allowing for optimal resource allocation and full competition.

Increasing-Cost Industry

An industry in which production costs increase as the entire market expands production, often due to finite resources.

Long-Run Equilibrium

A state in which all inputs are variable, enabling firms to make adjustments to output and prices to reach a point where no firm desires to change its production or exit the market.