Question

If the incentive to take advantage of a conflict of interest is high Question 3 options: A) removing the economies of scope that created the conflict may induce higher costs because of the decrease in the flow of reliable information. B) firms will always step in and work to remove the conflict. C) then the government must step in to remove the conflict. D) the costs of non-action in removing the conflict will always be higher than the cost of removing the conflict.

Answer 1

Answer:

The correct answer is letter "D": the costs of non-action in removing the conflict will always be higher than the cost of removing the conflict.

Explanation:

Conflicts of interest arise in organizations when the personal interest of a representative contrasts the interest of the company typically resulting in an unethical action. An example of a conflict of interest is influencing the recruitment of an applicant because the representative knows that person.

In case the cost of conflict is high, even higher will be the cost of non-action in removing the conflict since it will be detrimental for the company's interest over the long run.