Which of the Following Is True of the Principal-Agent Problem

question 88

Multiple Choice

Which of the following is true of the principal-agent problem?

• A) It arises when the interests of the agent and the principal differ.
• B) It arises when it is relatively easy for the principal to monitor the agent's performance.
• C) When there is a principal-agent problem, agency costs are zero.
• D) When there is a principal-agent problem, the agent is usually worse off.

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Definitions:

Anticompetitive Behavior

Actions by businesses aimed at undermining competition, often through unfair practices, to maintain or acquire market dominance.

Antitrust Law

A body of laws designed to prevent anti-competitive practices, monopolies, and to promote fair competition for the benefit of consumers.

Social Media Companies

Businesses that provide platforms for social networking, allowing users to share content, interact, and establish community over the internet.

Antitrust Enforcement

Government actions aimed at preventing monopolies and promoting competition among businesses within the market.