Multiple Choice
Which of the following conditions must hold in order to have a principal-agent problem?
A) Managers and owners have different objectives for the firm.
B) It is very costly to oversee every managerial decision to make sure all decisions increase the value of the firm.
C) Complete contracts effectively restrain managers from making value-reducing decisions.
D) The objectives of managers and owners are aligned but hidden actions by managers cannot be observed no matter how much is spent on monitoring managers.
E) both a and b
Correct Answer:
Verified
Correct Answer:
Verified
Q37: The principal-agent problem arises when<br>A)the principal and
Q38: Which of the following statements is true?<br>A)Shareholders
Q39: Which of the following statements is false?<br>A)Explicit
Q40: Answer the next questions using the
Q41: Firms with market power may try to
Q43: In markets characterized by oligopoly,<br>A)a large number
Q44: St.Charles Hospital,located in an upper-income neighborhood of
Q45: In a perfectly competitive market,<br>A)all firms produce
Q46: What is the most important characteristic of
Q47: Answer the next questions using the