The Principal-Agent Problem Arises When

Multiple Choice

The principal-agent problem arises when

A) the principal and the agent have different objectives.
B) the principal cannot enforce the contract with the agent or finds it too costly to monitor the agent.
C) the principal cannot decide whether the firm should seek to maximize the expected future profits of the firm or maximize the price for which the firm can be sold.
D) both a and b
E) both a and c