In a Principal-Agent Problem,if the Contract Used Leads to the Maximum

question 13

Multiple Choice

In a principal-agent problem,if the contract used leads to the maximum of the principal's and agent's combined value (profits,payoffs) ,we can say that this contract features

• A) inefficiency in production, since only the principal's profits should be maximized.
• B) inefficiency in production, since only the agent's payoffs should be maximized.
• C) efficiency in production.
• D) inefficiency in production, since the agent's payoffs should be maximized and the principal's profits should be minimized.

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Definitions:

About $100,000

An approximate amount of money or financial value, indicating a sum close to one hundred thousand dollars.

Closing Costs

Fees and expenses paid during the closure of a real estate transaction, generally by the buyer and seller.

E-SIGN Act

Federal law that validates the use of electronic records and signatures in commerce as legally equivalent to paper-based documents and traditional signatures.

Electronic Medium

A means of communication or the transmission of information that utilizes electronic technology, such as the internet or email.