The principal-agent problem happens because the owner cannot:
A) control the production process.
B) spend time at the physical plant site.
C) monitor the efforts of the manager.
D) evaluate the efforts of the manager.

Question

Quizplus · Accepted Answer

The principal-agent problem arises when the principal (owner) cannot effectively monitor the agent's (manager's) efforts, leading to potential misalignment of interests.

The Principal-Agent Problem Happens Because the Owner Cannot