Rent-seeking behavior creates:
A. waste and inefficiency.
B. waste, but is efficient.
C. inefficiencies, but not waste.
D. efficiency without waste.
A. waste and inefficiency.
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A firm wishes to fire an employee. The company will save up to $300 . per month on his compensation package. It is estimated that the employee contributes around $4,100 to the company. The firm
a. Should not fire the employee because the benefits outweigh the costs b. Should fire the employee if the hidden cost of not firing him is $500 c. Should fire the employee if the hidden cost of not firing him is $1500 d. Need more information
Which of the following is a solution to the principal-agent problem?
A) threaten to liquidate the firm B) link top manager salaries to the profits of the firm or the price of the firm's stock C) have the CEO be a rotating position D) forbid managers from owning any company stock