To reduce the principal-agent problem, A) managers can take on ...

[Pea0909berry]

To reduce the principal-agent problem,
 
  A) managers can take on more risk than they disclose to investors.
  B) managers can inflate profits on financial statements.
  C) boards-of-directors can tie the salaries of top management to the profitability of the firm.
  D) managers can hide liabilities by not disclosing them on financial statements.

Question 2

Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the price of cowboy hats increases from 38 to 46
 
  A) there will be a surplus of cowboy hats.
  B) producer surplus will rise from 22 to 46.
  C) consumers will buy no cowboy hats.
  D) the marginal cost of producing the third cowboy hat will increase to 46.

[nekcihc358]

Answer to Question 1

C

Answer to Question 2

B

[Pea0909berry]

Excellent

[kishoreddi]

TYSM