The Primary Reason Why Individuals Are Willing to Pay Entrepreneurs

question 188

Multiple Choice

The primary reason why individuals are willing to pay entrepreneurs to organize production is

• A)that they have to guarantee that the entrepreneur will make a profit
• B)they avoid taxation when activities are organized by someone else
• C)that it is better for businesses to pay taxes than individuals
• D)that it reduces transaction costs
• E)that entrepreneurs are more vulnerable in the case of the owner

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Definitions:

Principal-agent Problems

Situations where there is a conflict of interest between a principal (such as an owner or shareholder) and an agent (such as a manager), due to diverging goals or asymmetrical information.

Industrial Regulation

Government rules and regulations aimed at controlling the activities, standards, and behaviors within specific industries to ensure fairness, safety, and competition.

Natural Monopoly

A market condition where a single supplier is most efficient in providing goods or services due to high fixed or startup costs.

Industrial Regulation

The government policies and rules designed to control or direct economic activity and market forces within specific industries.