Which One of the Following Best Exemplifies the Principal-Agent Problem

question 193

Multiple Choice

Which one of the following best exemplifies the principal-agent problem in the employer-employee relationship?

• A) A worker takes 20-minute coffee breaks although the employer allots only 15 minutes for this purpose.
• B) A worker is on the job 50 hours per week although only 40 hours are required for promotion.
• C) A worker opts for early retirement in response to the firm's incentive plan.
• D) A worker's productivity is independent of the wage paid.

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Definitions:

Foreign Country

A nation different from one's own, especially in terms of home or operational base.

Strategic Control

A process used by organizations to monitor and regulate their strategies in order to achieve their long-term goals.

Home-country Firm

A business that operates from the country where it was established, contrasting with its operations or subsidiaries abroad.

Culture

The set of shared attitudes, values, goals, and practices that characterizes an organization or group.