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A Computer Manufacturer Sells Computers Online to Individual Customers, and Also

question 55

Multiple Choice

A computer manufacturer sells computers online to individual customers, and also has sales reps in the field that market the same computer systems to large businesses. Which of the following structures would be most appropriate for this organization?


Definitions:

Moral Hazard

A situation in policy and economics where one party is more inclined to take risks because the negative consequences of those risks will be borne, at least in part, by others.

Pre-contractual Problem

Issues that arise before a contract is finalized, often related to information asymmetry or negotiating terms.

Post-contractual Problem

Issues or disputes that arise after a contract has been signed and during its execution period.

Agency Costs

Costs incurred in principal–agent relationships; these costs are associated with moral hazard and adverse selection problems.

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