A Situation in Which One Party Makes a Contractual Agreement

question 8

Multiple Choice

A situation in which one party makes a contractual agreement with a second party in the expectation that the second party will act on its behalf is known as _____

• A)collusion.
• B)a horizontal agreement.
• C)an authority relation.
• D)a principal-agent problem.
• E)a vertical agreement.

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Definitions:

Resource Distribution

Refers to the allocation of resources, including land, labor, and capital, among different uses and geographic areas, affecting economic outcomes and efficiencies.

Property Rights

Legal rights to use, control, and derive benefits from resources such as land, intellectual property, and personal assets.

Markets

Any structure that allows buyers and sellers to exchange any types of goods, services, and information.

Central Planners

Officials or bodies within a government responsible for making decisions about the economy’s production and distribution of goods and services.