Question

Peter, a software engineer employed by Initech, sneaks into work late everyday and just sits at his desk spacing out for most of the week because he gets paid a fixed salary and has no incentive to work any harder.

This is most clearly an example of :

a. the duality problem

b.implicit costs

c. the law of diminishing marginal utility

d. shirking and the principle-agent problem

Answer 1

The correct answer is letter "D": shirking and the principle-agent problem.

Step-by-step explanation:

The principle-agent problem arises when the interests of the principal (owners) do not match the interest of the agent (employee). Under this scenario, the principal hires an agent to perform certain duties on their behalf but those activities conflict the interests of the agent.

Therefore, Peter is shirking at work by not performing the duties he has been hired for simply by doing nothing which is also related to the principle-agent problem.

Answer 2

Option D

Step-by-step explanation:

The issue with the principal agent is indeed a clash of interests between a individual or party and the official who is allowed to defend their interests. An employee can behave in a manner detrimental to the principal's economic interest.

The issue with the chief-agent is as diverse as the potential primary and agent positions. It can happens in any case where a resource or a principal's possession transfers exclusive authority of the resource to another faction or person.