A Firm Owner Wants a Manager to Make Difficult Personnel

question 12

Multiple Choice

A firm owner wants a manager to make difficult personnel decisions when necessary (which requires firing a worker every now and then) in order to maximize the firm's profits. The manager, however, prefers to not fire anyone. The worker also prefers not to be fired. In this example, who is the principal and who is the agent?

• A) The firm owner is the principal. The manager is the agent.
• B) The firm owner is the principal. The should-be-fired worker is the agent.
• C) The manager is the principal. The firm owner is the agent.
• D) The should-be-fired worker is the principal. The manager is the agent.
• E) The should-be-fired worker is the principal. The firm owner is the agent.

---

Definitions:

Mental Abilities

Cognitive functions and processes that include reasoning, problem-solving, memory, and understanding.

Babbling

A stage in child language development characterized by the production of sounds, syllables, and words without specific meanings, often a precursor to speaking.

Schemes

In psychology, schemes refer to structured clusters of concepts that organize past experiences and provide a framework for understanding future events.

Innate Tendency

An inherent inclination or natural disposition in living organisms towards certain behaviors or characteristics.