Explain the principal–agent problem in job performance and briefly describe actions that can be taken to correct the problem
What will be an ideal response?
A principal–agent problem arises when the interests of agents diverge from the interests of the principal. In an employment situation, workers would be agents and the principal would be the firm. Shirking on the job would be an example of a principal–agent problem because workers would be paid for less than the desired level of performance.
Firms can try to reduce shirking by monitoring worker activity, but this monitoring is costly. As a consequence, firms adopt worker incentive plans to tie worker compensation more closely to job performance. Two different incentive schemes would be: (1) incentive schemes that tie pay directly to performance such as piece rate compensation, commissions and royalties, or bonuses, stock options, and profit sharing; and (2) efficiency wages that get extra effort out of workers by paying them above average wages for the type of work performed.
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During 2008, oil price increases
A) did not shift the short-run aggregate supply curve as far to the left as similar increases had 30 years earlier. B) shifted the short-run aggregate supply curve farther to the left than similar increases had 30 years earlier. C) shifted the aggregate demand curve farther to the left than similar increases had 30 years earlier. D) shifted the aggregate demand curve farther to the right than similar increases had 30 years earlier.
Endogenous growth theory supports the conclusion that ________
A) government spending cannot influence the level of research and development B) increased government spending on research and development is counterproductive C) per capita income growth is a function of real factors, such as the supply of money D) increased government spending on research and development is useful
The Sandy Deli operates near a college campus. It has been selling 325 sandwiches a day at $1.75 each and is considering a price cut. It estimates 450 sandwiches would sell per day at $1.50 each. Calculate the marginal revenue of such a price cut and the elasticity between the two points
Sally leaves her $24,000 secretarial position with a company and invests her savings of $15,000 (on which she was earning 6 percent interest) in her own Ready Sec agency. After expenses, her net income was $28,900 . Her economic profit was
a. $4,900. b. $4,000. c. $28,900. d. ?$10,100.