An example of the principal-agent problem is when
A) managers try to cope with employees that are inefficient.
B) proprietors don't receive any money payment for their entrepreneurial skills.
C) managers devise penalties that eliminate employee waste.
D) managers devise incentives that encourage employees to act in the owner's behalf.
D
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The government enforces property rights by
a. requiring property owners to pay property taxes. b. providing police and courts. c. forcing people to own property. d. providing public parks and recreation facilities.
In the early 20th century, streetcars in many southern cities required that white passengers sit in the front of the car while black passengers sat in the back. The firms that ran the streetcars were
a. in favor of the segregation laws because they lowered costs and increased profits. b. against the segregation laws because they increased costs and lowered profits. c. lobbied local governments to enact such laws because their customers were willing to pay more for service in order to maintain the segregation. d. concerned about the effects of smoking. Since blacks smoked more than whites, they were supportive of the segregation laws.