Final answer:
Agency costs refer to the expenses related to the conflicts between managers and shareholders in a corporation, distinct from transaction costs, opportunity costs, and sunk costs.
Step-by-step explanation:
The costs associated with the conflicts of interest between the managers and the shareholders of a corporation are called agency costs. Agency costs arise due to conflicts between the goals of the company's managers and the goals of the company's owners, the shareholders. Managers may pursue personal benefit at the expense of shareholders' wealth, which can lead to expenses in monitoring or aligning interests, such as performance incentives or the threat of firing. Contrastingly, transaction costs relate to the expenses of making group decisions, opportunity costs represent the cost of forgoing the next best alternative, and sunk costs are past expenses that are no longer relevant to future decisions.