Which of the following offers an explanation as to why the principal-agent problem exists for a firm?
A) The firm cares less about profit and more about cost when there are many competitors in the market.
B) The firm offers an employee-incentive program in which employees share in the firm's profits.
C) The firm operates in a market with many competitors forcing the firm to pay its employees more to keep them from switching to another firm.
D) The firm operates to maximise profit while the employees attempt to work as little as possible to earn their paychecks.
Correct Answer:
Verified
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