1. All of the following statements are true about agency theory EXCEPT? ________.

A. according to the agency? theory, the likelihood that problems will occur increases when stock is widely? held, when the board of directors is composed of people who know little of the company or who are personal friends with top management

B. proponents of the agency theory argue that managers in? management-controlled firms select less risky strategies with quick payoffs to keep their jobs

C. the agency theory proposes that? management-controlled firms with weak boards are more likely to go into debt to diversify into unrelated markets

D. the agency theory states that a majority of a board needs to be from outside the firm so that top management is prevented from acting selfishly to the detriment of the shareholders

E. the agency theory proposes? that, because of their long tenure with the? corporation, insiders tend to identify with the corporation and its success

2. Sometimes advertising or other marketing activities cause problem recognition by showing consumers how much better off they would be with a new product or by pointing out problems with products they already own. Discuss problem recognition for the following product categories. Make a list of some ways marketers might try to stimulate problem recognition for each product. Present your ideas to your class.

a. Toothpaste

b. A home security system

c. A new automobile

d. An online dating service

e. A health club membership