A principal-agent problem arises in the situation in Scenario ...

[jerry coleman]

A principal-agent problem arises in the situation in Scenario 17.5 because
 
  A) the principal can measure effort and output; the agent can measure only output.
  B) the principal can measure only effort, and the agent can measure only output.
  C) the principal can measure only output, and the agent can measure effort and output.
  D) neither the principal nor the agent can measure effort.
  E) neither the principal nor the agent can measure output.

Question 2

We infer the distribution of income from the distribution of abilities.
 
  Indicate whether the statement is true or false

[amcvicar]

Answer to Question 1

C

Answer to Question 2

F