Use the Following Statements to Answer This Question

question 54

Multiple Choice

Use the following statements to answer this question:

• A) I and II are correct.
• B) I and II are incorrect.
• C) I is correct and II is incorrect.
• D) I is incorrect and II is correct.
• I.Increasing a firm's debt can decrease the agency costs faced by shareholders.
• II.Agency costs affect only shareholders.

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Definitions:

Voluntary Exchange

is a transaction where parties trade goods or services by mutual agreement, each benefiting from the exchange.

Private Property Rights

The legal rights to possess, use, and dispose of assets such as land, buildings, or personal items, protected under the law.

Comparative Advantage

The ability of a country or individual to produce a good or service at a lower opportunity cost than another.

Travel Costs

are expenses incurred by individuals or businesses related to traveling, such as transportation, lodging, and meals.