Monitoring
a. Gives the principle a better performance evaluation metric
b. Allows the principle to better align the incentives of the agent with the goals of the principle
c. Can be costly for the principal
d. All of the above
d
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Which is the best example of the law of supply?
a. A milling company builds a new factory to process flour to export. b. A catering company buys a new dishwasher to make their work easier. c. A food producer increases the number of acres of wheat he grows to supply a milling company. d. A sandwich shop increases the number of sandwiches they supply every day when the price is increased.
Refer to Scenario 16.1. Suppose instead that Sam is initially allocated 3 cheese doodles and 3 pretzels, whereas Sally is initially allocated 6 cheese doodles and 10 pretzels. Which of the following statements is TRUE?
A) This allocation is Pareto optimal. B) This allocation is not Pareto optimal as Sally and Sam have unequal amounts of each good. C) The allocation is not Pareto optimal as Sally would be willing to exchange two pretzels for one cheese doodle and be better off, without making Sam worse off. D) The allocation is not Pareto optimal as Sam would willing exchange one pretzel for two cheese doodles and be better off, without making Sally worse off.