Which of the Following Offers an Explanation as to Why

question 22

Multiple Choice

Which of the following offers an explanation as to why the principal-agent problem exists for a firm?

• A) The firm cares less about profit and more about cost when there are many competitors in the market.
• B) The firm offers an employee-incentive program in which employees share in the firm's profits.
• C) The firm operates in a market with many competitors forcing the firm to pay its employees more to keep them from switching to another firm.
• D) The firm operates to maximise profit while the employees attempt to work as little as possible to earn their paychecks.