A Principal-Agent Problem Arises When

question 28

Multiple Choice

A principal-agent problem arises when

• A)only less-qualified workers apply for a job
• B)a firm must find a proxy for unobservable qualities needed in employees
• C)potential employees have more information about their own productivity than do prospective employers
• D)a customer knows little about the service provided by a business
• E)a customer knows little about the service provided by a business and is, therefore, given poor service

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Definitions:

Common Law Remedies

Legal solutions or compensations available under common law systems, typically including damages, injunctions, and restitution.

Sale of Goods Act

Legislation that regulates the sale of goods, ensuring certain standards for transactions, such as the goods being as described, of satisfactory quality, and fit for purpose.

Duty Not to Injure

A legal obligation to avoid causing harm to others, typically in the context of negligence or tort law.

Disposable Propane Cylinders

Single-use containers designed for holding propane gas, commonly used for camping stoves and outdoor grills.