Fill in the Blanks: _____ Is an Important Constraint in the Moral-Hazard

question 5

Multiple Choice

Fill in the blanks: _____ is an important constraint in the moral-hazard problem because _____.

• A)The budget constraint ----it ensures the principal has enough money to pay the agent
• B)The participation constraint ---it ensures the agent chooses the action in the principal's best interest
• C)The participation constraint ----it ensures the principal is willing to offer the contract
• D)The incentive-compatibility constraint -----it ensures the agent chooses the action intended in the contract

Recognize conditions under which specific performance or substantial performance applies in contract law.

Comprehend the principles guiding remedies for breach of contract, such as damages and injunctions.

Identify anticipatory breach and its implications in contracts.

Grasp the concept of material breach and its consequences on contract obligations.

---

Definitions:

Nonfinancial Information

Data related to a company's operations that is not expressed in monetary units, such as customer satisfaction or employee turnover rates.

Setting Goals

The process of identifying specific, measurable, achievable, relevant, and time-bound objectives.

Period Costs

Period costs are those expenses that are not directly tied to the production of goods or services and are expensed in the period in which they occur, such as administrative and selling expenses.

Goods Manufactured

Products that have been completed and are ready for sale, representing the output of a manufacturing process.