A Drawback of Separating Ownership from Control by Creating a Firm

question 113

Multiple Choice

A drawback of separating ownership from control by creating a firm is:

• A) the losses of specialization.
• B) increased transaction costs.
• C) the principal-agent problem.
• D) synergies of team production.

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Definitions:

Short-Term Orientation

A perspective or approach that focuses on achieving immediate results rather than long-term goals.

Sustained Commitments

Ongoing dedication or obligation to a course of action, policy, or goal over a long period.

Thrift

is the practice of being economical and resourceful in the use of resources, often to achieve long-term financial sustainability.

Collectivism

A cultural value that emphasizes the importance of groups and collective action over individual achievement or identity.