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Author Question: Production inefficiency is most likely to occur when the principal has more information about work ... (Read 73 times)

Sufayan.ah

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on: Jul 1, 2018
Production inefficiency is most likely to occur when the principal has more information about work performance than the agent does.
 
  Indicate whether the statement is true or false

Question 2

An efficient contract is an agreement in which
 
  A) neither party can be made better off without harming the other party.
  B) both parties agree on its clauses.
  C) one party takes all.
  D) both parties agree to always do their best.


Bigfoot1984

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Reply #1 on: Jul 1, 2018
Answer to Question 1

False. It is when the agent has more information that production inefficiency is more likely to occur. The agent is able to shirk without being detected by the principal.

Answer to Question 2

A


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Sufayan.ah

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Reply #2 on: Jul 1, 2018
Thank you


Bigfoot1984

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Reply #3 on: Jul 1, 2018
No problemo


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