The principal-agent problem arises because of
a. natural selection
b. diminishing marginal returns
c. hidden actions
d. the winner's curse
e. hidden characteristics
C
You might also like to view...
Suppose that Brazil is capital abundant and Chile is natural resource abundant. If timber is natural resource intensive and computers are capital intensive, then
A) Chile will produce more computers after trade begins with Brazil. B) Brazil will produce more timber after trade begins with Chile. C) Chile will produce more timber after trade begins with Brazil. D) Brazil will completely specialize in computers once trade begins with Chile.
When an economic unit limits the scope of its productive efforts instead of trying to produce everything it needs, it is engaging in
a. exchange. b. comparative production. c. specialization. d. self-sufficiency.