Question 1 1 out of 1 points In a principal-agent relationship Selected Answer: the principal wants the agent to act on her own behalf Answers: the principal wants the agent to act on her own beha ...

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Question 1
1 out of 1 points

In a principal-agent relationship
Selected Answer:
the principal wants the agent to act on her own behalf
Answers:
the principal wants the agent to act on her own behalf
the agent wants the principal to act on his behalf
the principal wants the agent to act on the behalf of others
the agent wants the principal to act on the behalf of others
Question 2
1 out of 1 points

A potential problem arises in principal-agent relationships
Selected
Answer:
because the agents may have different goals from the principals
Answers: because the agents and the principals have identical goals
because the principals may want to minimize his profits, while the agent may
want to maximize them
because the agents may have different goals from the principals
the goals of principals and agents are irrelevant
Question 3
1 out of 1 points

A potential problem arises in principal-agent relationships

Selected
Answer:
because the agents' actions are not always observed by the principals
Answers:
because the agents' actions are not always observed by the principals
because the principals' actions are not always observed by the agents
because the agent's and the principals' actions are always observed by each
other
the observability of actions is irrelevant
Question 4
1 out of 1 points

The types of problems in principal-agent relationships typically include
Selected Answer:
Both A&B
Answers: adverse selection - whom to hire
moral hazard - how to motivate workers
uncertainty - how many workers will be needed
Both A&B
Question 5
0 out of 1 points

In a situation where a car salesman is selling cars on behalf of the dealer, the dealer is the
Selected Answer:
Agent
Answers:
Principal

Agent
Both of the above
None of the above
Question 6
1 out of 1 points

The problem the agent faces when deciding which agent to hire is called
Selected Answer:
Adverse selection
Answers:
Adverse selection
Moral hazard
Both of the above
None of the above
Question 7
1 out of 1 points

The problem the agent faces when deciding how to keep the agent motivated is called
Selected Answer:
Moral hazard
Answers: Adverse selection
Moral hazard
Both of the above
None of the above
Question 8
0 out of 1 points

If a principle is reducing agency costs by gathering information about the agent’s type, he is most
likely trying to solve the problem
Selected Answer:
Moral hazard
Answers:
Adverse selection
Moral hazard
Both of the above
None of the above
Question 9
1 out of 1 points

Which of the following is true?
Selected
Answer:
Incentive compensation imposes risk on the agent for which they should be
compensated
Answers: Incentive compensation imposes no risks on the agents and thus should not
affect their compensation
Incentive compensation imposes risk on the agent but need not be
compensated for
Incentive compensation imposes risk on the agent for which they should be
compensated
Incentive compensation is a bad idea
Question 10
0 out of 1 po