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Recall the last time you ate at an expensive restaurant where you paid the bill. Now think about the last time you ate at a similar restaurant, but your parents paid the bill. Did you order more food (or more expensive food) when your parents paid? Explain how this relates to the agency problem in corporations. (Select all the choices that apply.) A. Your situation could never lead to an agency problem since your parents would only want the best for you. B. In both situations there may be a lack of interest in controlling costs if those costs are not borne directly by the person making the decision. C. While you may be faced with an agency problem (spending more when your parents are buying than you would if you were paying), corporate managers are seldom faced with such decisions. D. The agency problem leads an individual (in your case) and corporate managers (in the corporate setting) to put their own self-interest ahead of the interests of the shareholders (your parents in your case).

Recall the last time you ate at an expensive restaurant where you paid the bill. Now think about the last time you ate at a similar restaurant, but your parents paid the bill. Did you order more food (or more expensive food) when your parents paid? Explain how this relates to the agency problem in corporations. (Select all the choices that apply.) A. Your situation could never lead to an agency problem since your parents would only want the best for you. B. In both situations there may be a lack of interest in controlling costs if those costs are not borne directly by the person making the decision. C. While you may be faced with an agency problem (spending more when your parents are buying than you would if you were paying), corporate managers are seldom faced with such decisions. D. The agency problem leads an individual (in your case) and corporate managers (in the corporate setting) to put their own self-interest ahead of the interests of the shareholders (your parents in your case).

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Recall the last time you ate at an expensive restaurant where you paid the bill. Now think about the last time you ate at a similar restaurant, but your parents paid the bill. Did you order more food (or more expensive food) when your parents paid? Explain how this relates to the agency problem in corporations. (Select all the choices that apply.) A. Your situation could never lead to an agency problem since your parents would only want the best for you. B. In both situations there may be a lack of interest in controlling costs if those costs are not borne directly by the person making the decision. C. While you may be faced with an agency problem (spending more when your parents are buying than you would if you were paying), corporate managers are seldom faced with such decisions. D. The agency problem leads an individual (in your case) and corporate managers (in the corporate setting) to put their own self-interest ahead of the interests of the shareholders (your parents in your case).
Transcribed Image Text:Recall the last time you ate at an expensive restaurant where you paid the bill. Now think about the last time you ate at a similar restaurant, but your parents paid the bill. Did you order more food (or more expensive food) when your parents paid? Explain how this relates to the agency problem in corporations. (Select all the choices that apply.) A. Your situation could never lead to an agency problem since your parents would only want the best for you. B. In both situations there may be a lack of interest in controlling costs if those costs are not borne directly by the person making the decision. C. While you may be faced with an agency problem (spending more when your parents are buying than you would if you were paying), corporate managers are seldom faced with such decisions. D. The agency problem leads an individual (in your case) and corporate managers (in the corporate setting) to put their own self-interest ahead of the interests of the shareholders (your parents in your case).
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