A Principal-Agent Problem Occurs When

Multiple Choice

A principal-agent problem occurs when

A) either a seller or buyer of labor is able to exercise a personal interest that undermines market efficiency
B) wage rates are greater than efficiency wages
C) wage rates are less than efficiency wages
D) agents representing professionals in a labor market exercise excessive negotiating power
E) agents representing professionals in a labor market are unable to represent their clients in a manner that generates maximum returns to the client