ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 14, Problem 3.7P
A
To determine
The principal-agent problem and to determine who is considered as a principal and in the given relationships
(a) A producer of export of goods and an export management company which helps to market the goods overseas.
Concept Introduction
When a principal hires an agent, to work on his behalf and to represent him in the dealings with the third party, the control will be separated. Then the issues related to principal and agent rises. These issues are known as principal-agent problem
B
To determine
The principal-agent problem and to determine who is considered as a principal and in the given relationship
(b) The management and the stockholders of a firm.
Concept Introduction
When a principal hires an agent, the control will be separated. Then the issues related to principal and agent rises. These issues are known as principal-agent problem
C
To determine
The principal-agent problem and to determine who is considered as a principal and in the given relationship
(c) The owner of the house and the plumber hired for repairs
Concept Introduction
When a principal hires an agent, the control will be separated. Then the issues related to principal and agent rises. These issues are known as principal-agent problem
D
To determine
The principal-agent problem and to determine who is considered as a principal and in the given relationship
(d) A patient and a dentist
Concept Introduction
When a principal hires an agent, the control will be separated. Then the issues related to principal and agent rises. These issues are known as principal-agent problem
E
To determine
The principal-agent problem and to determine who is considered as a principal and in the given relationship
(e) A management firm that manages the pension of the employees and the company that uses its services.
Concept Introduction
When a principal hires an agent, the control will be separated. Then the issues related to principal and agent rises. These issues are known as principal-agent problem
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Question 3 of 30
Stacy and Miguel are preparing to open a burger joint called "Stacy and Miguel's Burgers and More Burgers." They are still
unclear about the various types of business organizations. Answer the questions to clarify the differences between
business organizations.
Which business organization can raise capital by issuing stock?
sole proprietorship
corporation
O partnership
Which business organization typically has a single owner that has unlimited liability?
partnership
sole proprietorship
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a
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