A person acting as a supervisor as well as a residual claimant:
a. attempts to make value-maximizing investment decisions.
b. aims to maximize a firm's sales.
c. facilitates maximum investment in capital goods.
d. reduces risk of opportunism.
A
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The wealth effect explains the:
A. negative relationship that exists between consumer spending and overall price level. B. positive relationship that exists between consumer spending and overall price level. C. negative relationship that exists between consumer spending and overall asset valuation. D. positive relationship that exists between consumer spending and overall asset valuation.
Which of the following is NOT an example of a barrier to entry?
A. Rare natural minerals B. Heavy government regulations C. Lower costs D. Scarce land
If monopolistically competitive firms earn short-run economic profits, we expect to see
A) new firms enter the industry, which shifts the demand curves of the existing firms to the left until firms earn zero economic profits. B) new firms trying to enter the industry, but unable to do so because of barriers to entry. C) existing firms altering their scale of plant to try to capture larger profits. The combined effect is to cause all firms to earn zero economic profits. D) existing firms increasing prices to try to capture larger economic profits.
Which of the following is NOT an example of price discrimination?
A. Pharmaceutical companies charge customers living in wealthier countries higher prices than for identical drugs in poorer nations. B. A hard cover book selling for more than the same book in electronic form C. Breakfast cereal makers sending coupons to select buyers D. Student discount at a local movie theater