Agency problem is

• conflict interest between the principal and the agent

• agent acting in their best interest

• rare in bussiness and finance

• managers may prioritize their popular interest

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.

The principal–agent relationship entails that the principal

• 
  hires the agent.

• provides guidance to the agent

• 
  is smarter than the agent.

• is hired by the agent

Agency theory suggests that managers(the agents), particularly those of large, publically-owned firms, may have different objectives from those of the:

• 
  Workers

• Subordinates

• 
  Shareholders

• Employees

  
  

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

• contracts

• restrictions

• acquisition of a foreign subsidiary

•  bonus

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

• Principal and creditor

• Principal, agent and the third party

• Principal and debtor

• Principal and agent

Which of the following is not an ingredient of a principal-agent problem?

• Conflict of interest.

• 
  Asymmetric information.

• Equilibrium.

• Surplus available.

What not situation is real -world agency problem ?

• Enron scandal

• Bernie Madoff

• Boeing Buyback

• Blockchain