QUESTION 4 1 pointsSave Answer A manager who does not see his or her goal as the

Question

QUESTION 4 1 pointsSave Answer A manager who does not see his or her goal as the maximization of profit may nevertheless maximize the value of the firm. represents a principle-agent problem will likely be replaced either by shareholders or by a takeover of the firm. both b and c QUESTION 5 1 points Save Answer Moral hazard is the cause of principal-agent problems. occurs only rarely in modern corporations occurs when managers pursue profit maximization without regard to the interests of society in general exists when either party to a contract has an incentive to cancel the contract. QUESTION 6 1 points Save Answer A price-setting firm possesses little market power can lower the price of its product and sell more units. sells a product that is not differentiated from the product sold by its rivals or sells in a limited geographic market area with only one or a few sellers. can raise the price of its product and sell the same number of units. QUESTION 7 1 points Save Answer Economic profit is generally larger than accounting profit. can be calculated by subtracting implicit costs of using owner-supplied resources from the firm's total revenue is a theoretical measure of a firm's performance and has little value in real world decision making is negative when total costs exceed total revenues.

Explanation / Answer

A manager who does not see his or her goal as the maximisation of profit may never maximise the value of the firm. Moral hazard is the cause of principal agent problems. A price setting firm can lower the price of its product and sell more units. Economic profit is negative when total costs exceed total revenue.

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