The _____ of using the market for corporate control make it important to build incentives into executive pay packages that can reduce _____ by better aligning the incentives of shareholders and managers.
a. benefits; principal/agent problems
b. costs and uncertainties; principal/agent problems
c. benefits; influence costs
d. costs and uncertainties; influence costs
Question 2
According to economic theory, profits are maximized at the rate of output where
A) price equals total revenue.
B) marginal revenue equals marginal cost.
C) economic profits are zero.
D) price and marginal revenue are equal.
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