If an agent is risk averse and a principal is risk neutral, if the agent pays the principal a fixed fee
A) all risk is eliminated.
B) the risk neutral person bears all the risk while the risk averse person bears none.
C) the risk averse person bears all the risk while the risk neutral person bears none.
D) the principal and agent share risk equally.
C
You might also like to view...
Discuss reasons why we see trade restrictions. Are any of these reasons valid?
What will be an ideal response?
Venture capital funds invest in the equity of
A) start-up companies. B) IPOs. C) hedge funds. D) convertible debt.
Advertising is used by firms in a monopolistic competitive industry to
A) differentiate their product from those of competitors. B) increase brand loyalty. C) increase demands for their individual products. D) all of the above.
In the following graph, the price of capital is $100 per unit; the price of labor is $25 per unit. When output is 20 units, what is AVERAGE cost?
A. $7,000 B. $350 C. $700 D. $3,500 E. none of the above