Which of the Following Is Not Viewed as a Cost

question 5

Multiple Choice

Which of the following is not viewed as a cost to the principal in an agency relationship?

• A) Monitoring expenditures by the principal
• B) Monitoring expenditures by the agent
• C) Bonding expenditures by the agent
• D) The residual loss

Analyze situations to determine when a principal is or is not bound by the actions of an agent.

Understand the concepts of actual, implied, and apparent authority and how they affect the liability and responsibilities of agents and principals.

Recognize the legal consequences of an agent’s breach of fiduciary duty.

Comprehend the significance of estoppel in agency relationships.

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Definitions:

Resource Prices

The costs associated with acquiring the inputs or raw materials needed for production.

Firms

Business entities that produce goods or provide services, aiming to earn profits by meeting consumer needs.

Costs

Costs represent the monetary value of expenditures for inputs, labor, and other resources required to produce goods or services.

Purely Competitive Conditions

describes a market structure with many buyers and sellers, where each firm has no control over the market price and products are homogeneous.