Agency Problems

Which of the following is a case of the principal-agent problem?

• The ice cream man offers you $3 for an ice cream cone. You think this is too high and try to convince him to lower the price to $2, but he won’t budge.

• A car dealer tries to sell you a car. She lowers the price and throws in perks. What she doesn’t know is that the car is way outside your budget and there is no way you’ll buy it.

• You pick one hotel over another because its website advertises having a pool. After you arrive, you find out the pool is closed for the season. If you’d known this, you would have picked the other hotel.

• Your doctor could diagnose your symptom herself as part of your regular visit. But she receives a bonus for referrals, so she recommends you make an appointment with a specialist.

For the MNC, agency costs are typically

• non-existent

• larger than agency costs of a small purely domestic firm

• smaller than agency costs of a small purely domestic firm

• the same as agency costs of a small purely domestic firm

Which of the following is not a way in which agency problems can be reduced through corporate control?

• executive compensation

• the threat of hostile takeover.

• acquisition of a foreign subsidiary

• monitoring by large shareholders

Which is your favorite option?

• A

• B

• C

• D

Which one of the following is the best example of an agency problem? Assume the company is paying the employees' travel expenses.

• Ann, the controller, travels to Orlando, Florida to visit Disney World with friends. While there, she talks with her friends about employment opportunities at the firm.

• Juan, the chief financial officer, travels to France to meet with the bank that is loaning the firm money to build a factory in France. While in France, he tours Paris.

• Mike, the president, travels to China to attend an international convention related to the company's line of business. While there, he tours the Great Wall of China.

• Luisa, the marketing director, travels to California to attend a sales convention. While there she visits Disneyland.

In the majority of cases, the agency is the result of an agreement. Between whom?

• Principal and creditor

• Principal and agent

• Principal, agent, and the third party

• Principal and debtor

(Personal Question)

Please suggest to me a good series/movie to watch on Netflix/Prime.

The principal-agent problem describes a situation where:

• managers disagree with employees on production issues

• firms fail to achieve market power because of managerial incompetence

• shareholders prevent managers from maximising profits.

• managers follow their own inclinations, which often differ from the aims of shareholders

• firms fail to maximise long-term investment

The principal–agent relationship entails that the principal

• hires the agent.

• is smarter than the agent.

• provides guidance to the agent

• is hired by the agent

Mirzapur VS Sacred Games. Which one is better?

• Sacred Games

• Mirzapur