If all of the divisions in a vertically integrated firm are owned by the same company, why is it possible that asymmetric information problems can lead to inefficient outcomes in vertically integrated firms?
A) Divisions that produce parts for other divisions have effective monopoly power, so the outcome for these division must be inefficient.
B) This outcome is no longer possible in the U.S. after passage of the Sarbanes-Oxley law.
C) Vertically integrated firms are often subject to antitrust investigations, so managers routinely limit the amount of information that flows between divisions.
D) Managers in some divisions may not have information about production capacities or costs in related divisions.
D
You might also like to view...
If Al is risk averse, as his wealth increases, his total utility of wealth ________ and his marginal utility of wealth ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
Based on this graph, the multiplier effect shifts the aggregate demand curve from ______.
a. AD1 to AD2
b. AD2 to AD1
c. AD2 to AD3
d. AD1 to AD1
Martha did not like her job as a receptionist, so she quit and is looking for one that better suits her artistic talents. Ting Pei would like to work, but employers are not willing to hire him because he does not speak English. Martha is ________ unemployed and Ting Pei is ________ unemployed.
A. frictionally; structurally B. structurally; cyclically C. cyclically; structurally D. structurally; frictionally
A university requires that all entering first-year students learn how to use word processing and spreadsheet software. This is an investment in what type of capital?
A. human B. productive C. financial D. tangible