Which of the Following Is a Solution to the Principal-Agent

question 1

Multiple Choice

Which of the following is a solution to the principal-agent problem within a firm?

• A) Provide the managers with shares in the company.
• B) Increase the managers' annual sales target.
• C) Increase the fixed component of an employee's salary.
• D) Allow the government to set rules on performance.

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Definitions:

Water Desalinization

A process that removes minerals and salts from saline water to make it suitable for human consumption and irrigation.

Economic Advantage

A benefit or edge that allows an entity, such as a business or country, to outperform competitors or achieve superior economic outcomes.

Fracking

A method of extracting oil and natural gas from the earth by injecting high-pressure fluid into subterranean rocks to force open fissures.

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Treaties between two or more geographically close countries that facilitate trade by reducing tariffs and import quotas, enhancing economic integration.