Under the principal-agent model of contract relationships, situations such as machine breakdowns or a decrease in market demand would be classified under:

Question

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Situations such as machine breakdowns or a decrease in market demand fall under the category of "uncertainty" in the principal-agent model of contract relationships. This is because they are unpredictable events that can cause a disruption to the contract relationship between the principal and the agent. The principal may not know how the agent will respond to such situations and this can lead to a lack of trust in the relationship.

Under the Principal-Agent Model of Contract Relationships, Situations Such as Machine