What term describes when a firm has minimized the extent to which the exchange of goods and services in the vertical chain has been organized to minimize coordination, agency and transaction costs? (a) Agency efficiency (b) Technical efficiency (c) Lean compliant (d) Economizing (e) Six sigma compliant

The correct answer is (a) Agency efficiency .

Reason: An agency cost is a form of internal firm expense and it arises due to the agent action who is working on the behalf of the principal. The agency cost occurs only when there are inefficiencies, no satisfaction, and disturbance arises like conflicts of interest between the agent and principal or shareholders and management.

The term which is used for organizing the exchange of products and services in a vertical chain and minimized coordination is needed with low agency cost is called Agency Efficiency. The agent and principal relationships are positive and all the transactions are done efficiently.