Mr Adams Owns a Textile Business

question 71

Multiple Choice

Mr. Adams owns a textile business. In order to deal with the principal-agent problem, Mr. Adams might offer his employees

• A) incentive pay.
• B) long-term contracts.
• C) part- ownership.
• D) all of the above.

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Definitions:

Costs And Benefits

Costs and benefits refer to the negative and positive outcomes, respectively, that are considered when making decisions or evaluating actions and their impacts.

Social Trap

A situation in which a group of individuals act against their best interests by pursuing short-term gains, leading to a worse situation for all in the long term.

Collective Harm

Damage or injury that affects a group or community rather than an individual.

Self-Interest

Acting in a way that is beneficial to oneself, often driven by personal gain or advantage.