Author Question: How does a residual claimant help to resolve the problems faced by independent specialized ... (Read 82 times)

jilianpiloj · **on:** Jun 30, 2018

How does a residual claimant help to resolve the problems faced by independent specialized workers?

Question 2

Businesses often center production activities around
A) agents.
B) teams.
C) principals.
D) principals and agents.

DylanD1323 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A residual claimant with supervisory powers can resolve the difficulties independent workers have in arriving at choices that affect the entire group. Such problems arise because the workers have different investment responsibilities for their equipment, different attitudes toward risk, and differing beliefs about a new strategy's probability of success. For example, a boss/residual claimant decides (possibly with advice from others) whether to begin producing safety pins. Having made the decision she may hire or terminate workers, change their assignments, and replace existing capital goods with equipment better suited for safety pin manufacture. She is the logical person to make this decision because as residual claimant she has the greatest incentive to make a correct choice.

Answer to Question 2

B