Nguyen's team of salespersons is not very productive in making sales. They claim to work in the field all day, but the product sales have been minimal. Nguyen is experiencing a _____ problem.
A)lemon
B)risk-aversion
C)moral-aversion
D)principal-agent

Question

Quizplus · Accepted Answer

This is a principal-agent problem, where Nguyen is the principal who has hired salespersons as agents to sell his products. However, the agents may not have aligned incentives with the principal and may not be working towards achieving the principal's goals. This issue needs to be addressed by implementing better monitoring and incentive structures. A lemon problem would imply that the product quality is poor, which is not given in the scenario. Risk-aversion and moral-aversion are not relevant in this context.

Nguyen's Team of Salespersons Is Not Very Productive in Making