An example of an agency cost because of inefficient behavior is
A) Employees surfing the internet for personal reasons during working hours
B) Employees spending an appropriate amount of time on long-term projects
C) Team members working together with concentrated effort
D) Exceeding a time budget because of uncontrollable price increases

Question

Quizplus · Accepted Answer

Agency costs arise when there is a conflict of interest between principals (owners) and agents (employees), leading to inefficient behavior. Employees surfing the internet for personal reasons during working hours is an example of such behavior, as it represents a misuse of company resources and time, reducing productivity.

An Example of an Agency Cost Because of Inefficient Behavior