Definitions L2 Flashcards
revise definitions for the next lesson
1
Q
Principal-agent problem
A
arises from conflict between the objectives of the principals and their agents, who take the decisions on their behalf
2
Q
Principals
A
business owners
3
Q
agents
A
managers running a business on shareholders behalf
4
Q
utility maximisation
A
managers maximising their utility
5
Q
social welfare
A
a firm existing to benefit wider society
6
Q
corporate social responsibility (CSR)
A
a firm acting to benefit wider society the community or their employees
7
Q
profit satisficing
A
managers doing just enough to satisfy shareholders by producing satisfactory profits
