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:

Stadium Capacity

The maximum number of spectators that a sports venue can accommodate.

Reservation Price

The maximum or minimum price a consumer is willing to pay for a good or service.

Utility Function

A mathematical representation of a consumer's preference ranking for various bundles of goods, used in economics to analyze consumer behavior.

Barbie's Preferences

This term does not reference a recognized economic concept, but could figuratively refer to a theoretical model of consumer choice or preference, using Barbie as an example.