Economics (AS & A Level) · Oct / Nov 2021 · Paper 32 · Question 11

What is an example of the principal–agent problem?

1. Athe disincentive effect for entrepreneurs of high government tax rates
2. Bthe existence of a trade union to put forward workers’ views to managers
3. Cthe lack of consumer knowledge of the quality of firms’ products
4. Dthe separation of the owners of a firm from the firm’s managers

As printed in the paper