Costs incurred to reduce opportunistic behaviour plus the costs of opportunistic behaviour that it is not economic to eliminate are known as:
A) political costs
B) bonding costs
C) agency costs
D) opportunity costs

Question

Quizplus · Accepted Answer

The costs incurred to reduce opportunistic behavior (such as monitoring costs, incentive alignment costs, etc.) and the costs of opportunistic behavior that cannot be eliminated (such as residual loss) are collectively known as agency costs. Political costs refer to the costs incurred by a firm for engaging in political activities. Bonding costs refer to the costs associated with the bonding of managers and employees to demonstrate their loyalty and commitment to the company. Opportunity costs refer to the costs incurred by foregone opportunities or alternatives.

Costs Incurred to Reduce Opportunistic Behaviour Plus the Costs of Opportunistic