Which of the Following Scenarios Could Be Considered an Example

question 81

Multiple Choice

Which of the following scenarios could be considered an example of an agency problem.

• A) Management decides to close a plant to lower operating costs.
• B) Management decides to go ahead with an expansion that is expected to benefit the company's value.
• C) The board of directors rewards management for the company's last year performance.
• D) Management decides to purchase a Boeing 747 as a corporate plane.

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Definitions:

Tract Home Construction

Tract home construction involves building multiple homes based on a set of standardized designs and layouts, typically found in suburban developments.

Nuclear Attacks

The use of nuclear weapons against an enemy target, with catastrophic effects on the target area and significant long-term environmental and health impacts.

Mass Consumption

Refers to the widespread purchasing of goods and services by a large portion of the population, typically in an industrial or post-industrial economy.

Postwar American Culture

The societal attitudes, norms, and cultural expressions that emerged in the United States following the end of World War II, characterized by economic prosperity, suburban expansion, and the rise of consumerism.