The principal-agent problem refers to the fact that firms must
A) choose between economic efficiency and technological efficiency.
B) choose between a managerial and an incentive system.
C) devise incentives to get employees to work in the best interest of the firm's owners.
D) choose between operating as a partnership or corporation.
C
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Which one of the following statements is true?
a. Discount rates should always be set to zero to maximize efficiency b. Discount rates should be constant over time c. The use of discount rates will always maximize future benefits d. The use of discount rates becomes more problematic as longer time periods are considered e. High discount rates promote resource conservation
Inflation makes it difficult to distinguish relative price changes from changes in the general level of prices. Consequently, inflation ________ the efficiency of the market system.
A. decreases B. increases C. does not change D. may either increase or decrease