Author Question: The agency problem can be avoided if A) the firm is not subject to regulation by a government ... (Read 27 times)

fagboi · **on:** Jul 1, 2018

The agency problem can be avoided if

A) the firm is not subject to regulation by a government agency.
B) the manager and owner can manipulate reported profit.
C) the firm has positive profits.
D) the goals of the owner and manager are aligned.

Question 2

Sarah and David both have linear demand curves for lemonade. Sarah's demand curve for lemonade intersects David's demand curve at a price of 50 cents per glass. Sarah's demand curve is more inelastic than David's.

A change in the price of lemonade from 50 cents to 25 cents per glass will A) decrease Sarah's consumer surplus more than David's.
B) decrease David's consumer surplus more than Sarah's.
C) increase Sarah's consumer surplus more than David's.
D) increase David's consumer surplus more than Sarah's.