What can be done to deal with the principal-agent problem?
A) forbid managers from owning any company stock
B) have the CEO be a rotating position
C) link top manager salaries to the profits of the firm or the price of the firm's stock
D) threaten to liquidate the firm
C
You might also like to view...
How did the Great Depression affect economists' beliefs about the macroeconomy?
What will be an ideal response?
How is it logically possible for a monopolist to get different consumers to purchase different bundles on a menu (such as different sizes of coffee cups), and thereby achieve a form of price discrimination, even if the firm cannot observe the consumers' valuations directly? a. Different types of consumers have different tradeoffs between money and amounts of the good. b. The monopolist can use
a market-separation strategy. c. Social norms are powerful deterrents to lying about one's type. d. This is impossible: if one bundle is preferred by one type, logically it will be preferred by all.