Help with a M.C. question - Not highly important. (1 Viewer)

[Brad.1990]

What term is given to costs that arise from the separation of owners and managers?
A. Conflicts of Interest
B. Agency Costs
c. Separation costs
D. Incentive Costs

I have no idea what the last three actaully are, so I put C as it seemed like the logical option. I was wondering what the three different costs actaully are.
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[chriskoss]

You were right saying you dont know what the others are. Thus, don't pick an answer you don't understand.

The correct answer is conflicts of interest.

M/C is easy, so what they do is word the question in a difficult way so you get confused.

Managers who have been seperated from their initial jobs or whatever will obviously be annoyed and thus it will create a conflict of interest as the manager(s) will be complaining to the business owners, as it is a resistance to change > And the solution to a resistance of change is reconciling conflicts of interest. So there's your answer

 

[sidra]

I thought it would be agency costs, referring to the Leading Edge textbook:

"Costs that arise from the separation of owners and managers are known as 'agency costs'. Agency costs arise because the agents (managers) can often have different motives to the principals (owners) who hire them."

Conflicts of interest aren't a 'cost', I wouldn't know what separation costs are and incentives are bonuses, right?

Anyhow, the answer to your question was agency costs.

 

[Michaelmoo]

What term is given to costs that arise from the separation of owners and managers?​

A. Conflicts of Interest
B. Agency Costs
c. Separation costs
D. Incentive Costs

I have no idea what the last three actaully are, so I put C as it seemed like the logical option. I was wondering what the three different costs actaully are.

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Are you sure this question is business management and change? It sounds like Employment relations to me.