In the Principal-Agent Model,at the Employee's Optimal Effort Choice

question 20

Multiple Choice

In the principal-agent model,at the employee's optimal effort choice:

• A)the net benefits of effort are maximized.
• B)the marginal costs of efforts exceed the marginal revenue.
• C)the incentive coefficient of effort is very high.
• D)the marginal benefit of effort is negative.

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Definitions:

Time Limit

A specific duration within which an action must be initiated or completed.

Mailbox Rule

A legal principle that an offer is considered accepted once the acceptance is dispatched, not when it is received by the offeror.

Verbal Acceptance

An agreement to the terms of an offer conveyed through spoken words rather than written.

Promissory Estoppel

A legal principle that prevents a promisor from retracting a promise when the promisee has relied on it to their detriment.