The principal-agent problem happens because the owner cannot:
A. control the production process.
B. monitor the efforts of the manager.
C. spend time at the physical plant site.
D. evaluate the efforts of the manager.
Answer: B
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For people with very low incomes, the Earned Income Tax Credit operates like a(n):
A. wage subsidy. B. lump sum transfer. C. tax on wages. D. in-kind transfer.
A downward shift of the planned expenditure curve resulting from an increase in the price level corresponds to
A) a movement up along the aggregate demand curve. B) a movement down along the aggregate demand curve. C) an increase in aggregate demand. D) a decrease in aggregate demand.
All of the following are true about central bank independence except that it:
A. can be subverted by the actions of fiscal policymakers. B. can be eliminated by governments in a time of crisis. C. is usually guaranteed by a country's constitution. D. is usually given at the pleasure of governments.
Ellie is spending her entire income on goods X and Y. Her marginal utility from the last unit of X is 100 and the marginal utility from the last unit of Y that she consumes is 50. Ellie's utility is only maximized if
A. the prices of X and Y are the same. B. the price of good Y is twice that of good X. C. the price of good X is twice that of good Y. D. We cannot determine whether Ellie is maximizing her utility.