What Is the Principal-Agent Problem

question 126

Multiple Choice

What is the principal-agent problem?

• A)It is a problem caused by a person (principal)who hires an agent to act on his behalf but is unwilling to delegate authority to the agent to carry out the task in the best possible way.
• B)It is a problem caused by agents pursuing their own interests rather than the interests of the principals who hired them.
• C)It is a problem of the power system of boss and subordinate where the boss (principal)exerts influence over his subordinates (agents)using punishment or threat.
• D)It is a problem that exists when a person (principal)has more information about the task than the agent he hires to perform the task.

---

Definitions:

Financial Hardship

Financial hardship is a situation where an individual or family struggles to manage their finances, often leading to stress, debt, and inability to cover essential expenses.

Homeless

Homeless refers to individuals who lack stable, permanent, and appropriate housing, forcing them into situations such as living on the streets, in shelters, or in temporary accommodations.

Unemployed

The state of not being employed, including not having a job despite being willing and able to work.

Drinking and Drug Problems

Issues relating to the misuse or dependence on alcoholic beverages or narcotics, which can lead to physical, psychological, and social harm.