Which of the following explains most clearly why business owners have a strong incentive to strive for operational efficiency?
A) They recognize that operational efficiency promotes the public interest.
B) As residual claimants, owners will receive a higher income from increased efficiency.
C) The owners will be able to keep production costs low by providing free managerial services to the firm.
D) The owners will be able to gain by paying employees below market wages, which will improve the overall efficiency of the economy.

Question

Quizplus · Accepted Answer

Business owners, as residual claimants, benefit directly from increased operational efficiency because it leads to higher profits, which translates to higher income for them.

Which of the Following Explains Most Clearly Why Business Owners