ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337408059
Author: William A. McEachern
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 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
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
2. Offshoring Diagrams using High Skill and Low Skilled labor
Consider the US financial industry. When offshoring is occurring, US firms employ both high and low skilled workers in the U.S. and the Philippines.
a) Create a task line which arranges some of the tasks you would expect to see in the financial industry ordered from the least skill-intensive on the left-hand side to the most skill-intensive on the right-hand side. (this picture just needs to depict your best guess about which tasks are more or less skill-intense)
b) Place a marker somewhere in the middle of your task line, and label it A. If the relative wage for high skill workers in the US is higher than the ratio for the Philippines [ (W^ tilde H /W^ L )us< (W ^ H / (W ^ L)) p 1 will the US do the activities on the right-hand or left-hand side of the division point A?
c) Suppose new cyber threats in 2024 increase the cost of offshoring of financial services by U.S. companies. Use diagrams and describe how this affect…
2.
A friend has started a business selling software. The software is a great
hit, and the firm quickly grows large enough to sell stock. Your friend's firm promises
to pay a dividend of $5 per share every year for the next 50 years, at which point your
friend intends to shut down the business. The firm's stock is currently selling for $75
per share. If you believe that the company really will pay dividends as stated and if
you require a 10% rate of return to make this investment, should you buy the stock?
Briefly explain.
1. Financial institutions in the U.S. economy
Suppose Charles would like to use $1,000 of his savings to make a financial investment.
One way of making a financial investment is to purchase stock or bonds from a private company.
Suppose RoboTroid, a robotics firm, is selling stocks to raise money for a new lab-a practice known as
finance. Buying a share of
RoboTroid stock would give Charles
the firm. In the event that RoboTroid runs into financial difficulty,
will be paid first.
Suppose Charles decides to buy 100 shares of RoboTroid stock.
Which of the following statements are correct? Check all that apply.
RoboTroid earns revenue when Charles purchases 100 shares, even if he purchases them from an existing shareholder.
O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Charles's shares to decline.
An increase in the perceived profitability of RoboTroid will likely cause the value of Charles's shares to rise.
Alternatively,…
Chapter 14 Solutions
ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
Knowledge Booster
Similar questions
- 4 You quit your job as an analyst making $50,000. You then take your $500,000 in savings and open a Mighty Taco restaurant. You work roughly the same hours as before and make $60,000 per year from the restaurant. Assume the interest rate on government treasury notes is 5%. Calculate the economic profit or loss from your move in year 1. (Include a negative sign if it’s a loss) Enter as a value.arrow_forwardNo hand written solution and no img 5. “ As a manger of a firm, you are concerned about a potential increase in interest rates, which would reduce the demand for your firms’ products. The Fed is scheduled to meet in one week to assess economic conditions and set monetary policy. Economic growth has been high, but inflation has also increased from 3% to 5% over the last four months. The level of unemployment is so low that it cannot go much lower. a. Given the situation, is the Fed likely to adjust monetary policy? If so how? b. Recently, the Fed has allowed the money supply to expand beyond its long term target range. Does this affect your expectations of what the Fed will decide at its upcoming meeting? c. Suppose the Fed has just learned that the treasury will need to borrow a large amount of funds than originally expected. Explain how this information may affect the degree to which the Fed changes its monetary policy. (This question is from our textbook P. 111)arrow_forward13. Stock quotes - Looking up a stock price The price of a stock is largely influenced by supply and demand. When more people want to buy a stock, the price goes _______ . By contrast, when more people want to sell a stock, the price goes_________ . You can look up the current price for a stock, and other important numerical measures, by searching for the company (or the stock’s trading symbol) on popular financial or investing websites. Many newspapers also publish abbreviated information in the financial section for many common stocks, bonds, and mutual funds. The following table represents the format of typical price quotes for various stocks that would appear in the financial section of a newspaper: YTD 52 WEEKS YLD VOL NET % CHG HI LO STOCK (SYM) DIV % PE 100S LAST CNG +9.25 56.31 39.04 Global Communications GC 0.36 0.72 23.17 58093 50.06 +1.82 +18.87 48.57 36.55 GermCorp GERM 0.14 0.30 20.48 8134 47.05…arrow_forward
- Resources Submit All 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 &13 PM 46°F 12/15/2021 aarrow_forward1. Financial institutions in the U.S. economy Suppose Yakov would like to use $6,000 of his savings to make a financial investment. One way of making a financial investment is to purchase stock or bonds from a private company. Suppose RoboTroid, a robotics firm, is selling stocks to raise money for a new lab-a practice known as finance. Buying a share of RoboTroid stock would give Yakov the firm. In the event that RoboTroid runs into financial difficulty, will be paid first. Suppose Yakov decides to buy 100 shares of RoboTroid stock. /hich the following statements are correct? Check all that apply. O An increase in the perceived profitability of RoboTroid will likely cause the value of Yakov's shares to rise. O Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Yakov's shares to decline. O The price of his shares will rise if RoboTroid issues additional shares of stock. Alternatively, Yakov could make a financial investment by…arrow_forward(Scenario: Accounting and Economic Profit) Use Scenario: Accounting and Economic Profit. What is the opportunity cost of Wang's $100,000 inheritance being used to start his business?Scenario: Accounting and Economic ProfitRather than put the $100,000 that his grandmother left him in a mutual fund that earns 5% each year, Tommy Wang quit his job, which paid $60,000 per year, and started Wang's Wicker Furniture Store. He rented a showroom for $20,000 for the year, purchased $60,000 in wicker furniture, and incurred costs of $40,000 for sales help and advertising. In his first year, his revenue was $150,000.arrow_forward
- 3arrow_forward3arrow_forward2. The market for capital The following graph shows the supply of and demand for capital in a market over the last year. You can see that the demand for capital has increased over the last year (the demand curve shifted to the right). Place the black X at the equilibrium interest rate and the quantity of capital. INTEREST RATE, r (Percent) 20 18 16 14 12 co 10 2 0 $ SO 0 D2 D1 2 4 6 8 10 12 14 CAPITAL (Billions of dollars) Weakened 16 18 20 Strengthened Equilibrium The market interest rate increased by 2.0%, and the amount of capital borrowed increased Does it appear that the economy has strengthened or weakened over the past year? ? by $2.0 billion.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning