Which of the Following Contributes to Principal-Agent Problems in Large

question 38

Multiple Choice

Which of the following contributes to principal-agent problems in large modern firms?

• A) The dispersion of information among many decision makers
• B) The consolidation of management and ownership in a single entity
• C) The specialization of labor.
• D) The agreement between managers of different departments to increase profits at any cost
• E) The use of in-house production rather than outsourcing.

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Definitions:

Detachment

The emotional state of being impartial or aloof from others, often considered a mechanism to avoid distress or disappointment.

Ambivalence

The simultaneous presence of conflicting emotions, attitudes, or thoughts towards a person, object, or situation.

Protest

An expression or declaration of objection, disapproval, or dissent, often in a public context.

Despair

A profound feeling of hopelessness, dejection, and loss of interest or pleasure in activities, often impeding normal functioning.