What Is the Difference Between Terminal and Instrumental Values

question 19

Multiple Choice

What is the difference between terminal and instrumental values?

• A) Terminal values are what you do and instrumental values are what you want
• B) Terminal values are what you do and instrumental values are what you value
• C) Terminal values are what you want and instrumental values how you reach your terminal values
• D) Instrumental values are what you want and terminal values are how you reach your instrumental values

Understand the concept of moral hazard as a post-contractual problem.

Grasp the concept of adverse selection as a pre-contractual problem.

Identify the types of problems in principal-agent relationships.

Recognize the importance of information gathering in solving agency problems.

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Definitions:

Special Order

A customer request for goods or services that are not part of a company's standard offerings, often requiring unique production or procurement efforts.

Variable Selling

denotes the costs that vary directly with the level of sales, such as commissions or shipping charges.

Administrative Costs

Expenses related to the general administration of a business, such as salaries of executive staff, office supplies, and utilities.

Target Costing

A pricing approach where a company determines the potential selling price of a product and then subtracts desired profit to arrive at a target cost, subsequently focusing on reducing manufacturing costs to meet this target.