ECO370Y5 Study Guide - Midterm Guide: Risk Premium, The Incentive, Investment Banking

The primary objective of a cartel is to:

A. maximize the amount of profit received by each member of the organization.

B. ensure each member of the organization some minimum amount of profit.

C. maximize the joint profits of the members of the organization.

D. maximize the average profits of the members of the organization.

Discuss the various forms of organization. Evaluate the organizational form that would be most efficient in minimizing the Principal-Agent problem.

5. Firms’ primary objective is:

a. Utility maximization

b. Profit maximization

c. Output maximization

d. Respect maximization