You inherited your uncle's bakery in a remote area. The bakery has to stay in the family, but you prefer to keep your jo

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You Inherited Your Uncle S Bakery In A Remote Area The Bakery Has To Stay In The Family But You Prefer To Keep Your Jo 1 (27.43 KiB) Viewed 92 times

You inherited your uncle's bakery in a remote area. The bakery has to stay in the family, but you prefer to keep your job and hired a local manager. The profits of the bakery depend on the economy and on the manager's effort, according to the following table: Good economy Bad economy No effort $8,000 $3,000 High effort $20,000 $15,000 The good and bad economies have equal probabilities. When the manager makes no effort, he is running his own side business that is generating $2,000. Which of the following incentives avoids the principal-agent problem? O A 14% of the profit OB A fixed salary of $3,000 OC. None of the listed options OD 10% of the profit