You own an ice cream store and are concerned that an employee may be giving generous scoops to friends and relatives and smaller scoops to some other customers. This may be reducing sales. In this example, you are the
A)principal and your employee is the agent.
B)agent and your employee is the principal.
C)signaler and your employee is the screener.
D)screener and your employee is the signaler.

Question

Quizplus · Accepted Answer

In this scenario, you are the principal because you own the ice cream store and have hired the employee to perform tasks on your behalf. The employee acts as the agent, carrying out duties under your direction. This relationship is a classic example of the principal-agent problem, where the agent (employee) may have personal interests that conflict with those of the principal (employer or store owner).

You Own an Ice Cream Store and Are Concerned That