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Asked by Wenlu Zhang on May 30, 2024

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There will be no principal-agent problem if a firm's owner (like a business consultant)does all the work of the firm.

Principal-Agent Problem

A dilemma in a relationship where one party (the agent) is expected to act in the best interest of another (the principal), but may have motivations to act in their own interest instead.

Business Consultant

A professional who provides expert or professional advice in a particular area of expertise, such as business, to help organizations improve performance.

  • Understand the principal-agent problem in the context of labor economics.
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ZK
Zybrea KnightJun 04, 2024
Final Answer :
True
Explanation :
If the firm's owner does all the work, there is no separation between ownership and control, thus eliminating the principal-agent problem which arises from conflicting interests between owners (principals) and managers or employees (agents).

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