A Firm Owner Wants a Manager to Make Difficult Personnel

question 5

Multiple Choice

A firm owner wants a manager to make difficult personnel decisions when necessary (which requires firing a worker every now and then) in order to maximize the firm's profits. The manager, however, prefers to not fire anyone. The worker also prefers not to be fired. In this example, who is the principal and who is the agent?

• A)The firm owner is the principal. The manager is the agent.
• B)The firm owner is the principal. The should-be-fired worker is the agent.
• C)The manager is the principal. The firm owner is the agent.
• D)The should-be-fired worker is the principal. The manager is the agent.
• E)The should-not-be-fired worker is the principal. The firm owner is the agent.

---

Definitions:

Reg-Neg Rule Making

A regulatory process in the U.S. that involves negotiations between federal agencies and affected stakeholders to draft rules or regulations.

Interstate Commerce Commission

A former federal agency in the United States that regulated the railroad industry and other modes of transportation, abolished in 1995.

Anticompetitive

Anticompetitive refers to actions or policies designed to reduce competition in a market, potentially leading to monopolistic behaviors and harming consumer interests.

Legislative Power

The authority to make laws and alter or repeal them, usually vested in a parliament or legislative assembly.