Any Relationship in Which One Party, the Principal, Considers Entering

Multiple Choice

Any relationship in which one party, the principal, considers entering into a contractual agreement with another, the agent, expresses the principal-agent model.Regardless of the reason for relying on an agent, the principal faces what two problems?

A) Influence activities and the problem of vertical expansion
B) Design decisions and pricing decisions
C) Sunk costs and skimming
D) Adverse selection and moral hazard
E) Externalities and competitive bidding