26. Two common agency problems include

A. managers investing some of a firm's capital in managerial perquisites that do not add economic value to a firm and managerial risk aversion.

B. managers not investing enough of a firm's capital in managerial perquisites and managerial risk aversion.

C. managers investing some of a firm's capital in managerial perquisites that do not add economic value to a firm and managerial risk seeking.

D. managers not investing enough of a firm's capital in managerial perquisites and managerial risk seeking.

27. A(n) ________ exists whenever two or more independent organizations cooperate in the development, manufacture, or sale of products or services.

A. vertical market

B. strategic alliance

C. initial public offering

D. market transaction

28. In a ________, cooperating firms create a legally independent firm in which they invest and from which they share any profits that are created.

A. licensing agreement

B. supply agreement

C. distribution agreement

D. joint venture

29. Network industries are characterized by

A. increasing diseconomies of scale.

B. increasing returns to scale.

C. decreasing returns to scale.

D. decreasing economies of scale.

30. When one firm makes more transaction-specific investments in a strategic alliance than partner firms make, that firm may be subject to a form of cheating called ________ that occurs when a firm that has not made significant transaction-specific investments demands returns from an alliance that are higher than what the partners agreed to when they created the alliance.

A. adverse selection

B. holdup

C. moral hazard

D. noncompliance