The principal-agent problem arises when
A) the principal and the agent have different objectives.
B) the principal cannot enforce the contract with the agent or finds it too costly to monitor the agent.
C) the principal cannot decide whether the firm should seek to maximize the expected future profits of the firm or maximize the price for which the firm can be sold.
D) both a and b
E) both a and c
Correct Answer:
Verified
Q3: value of a firm is
A)smaller the higher
Q5: Economic profit is
A) the difference between total
Q6: A price-setting firm
A) can lower the price
Q7: A risk premium is
A) a measure calculated
Q8: Economic profit
A) is a theoretical measure of
Q9: Which of the following statements is true?
A)
Q11: Moral hazard
A) occurs when managers pursue maximization
Q12: When economic profit is positive,
A) total revenue
Q14: When a firm is a price-taking firm,
A)
Q15: Which of the following is NOT a
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents