By making managerial compensation depend on the performance of the firm's profits,the firm owner's profits:
A) rise.
B) fall.
C) remain constant.
D) initially fall, then rise.

Question

Quizplus · Accepted Answer

By tying managerial compensation to the firm's profits, managers are incentivized to make decisions that will increase profits, ultimately benefiting the firm owners. Therefore, the firm owner's profits are likely to rise.

By Making Managerial Compensation Depend on the Performance of the Firm's