"Levers of Control," in Addition to a Diagnostic Control System

question 18

Multiple Choice

"Levers of control," in addition to a diagnostic control system, are needed in an organization because ________.

• A) diagnostic controls have been found to lead to poor financial performance
• B) diagnostic controls have no place in a balanced scorecard system
• C) pressure to perform on diagnostic controls may lead to unethical behavior
• D) they are mandated by the Financial Accounting Standards Board

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Definitions:

Market Price

The current price at which a good or service can be bought or sold in an open and competitive market.

Purely Competitive Market

A market structure characterized by a large number of buyers and sellers, homogeneous products, and free entry and exit, leading to price taking behavior.

Purely Competitive Firm

A company operating in a market where there are many buyers and sellers offering homogeneous products, leading to the inability to influence market price.

Total Revenue

The total income received by a firm from the sale of its goods or services.