The Principal-Agent Problem of Ownership Vs

question 21

Multiple Choice

The principal-agent problem of ownership vs. control of the corporation arises when owners and managers:

• A) are the same people.
• B) pursue objectives that differ from those their customers wish them to pursue.
• C) pursue objectives that differ from those their workers wish them to pursue.
• D) pursue objectives that differ from those the government wishes them to pursue.
• E) pursue different objectives.

---

Definitions:

Joke

A narrative or statement intended to provoke laughter or amusement.

Market Failure

A situation in which the allocation of goods and services by a market is not efficient, often leading to a net social welfare loss.

Imperfect Information

A situation where buyers, sellers, or both lack the necessary information to make informed decisions about the market.

Private Goods

Goods that are excludable and rivalrous, meaning their consumption by one individual prevents another from consuming them.