Suppose Bob owns two factories that are located several hundred miles apart. Bob

Question

Suppose Bob owns two factories that are located several hundred miles apart. Bob decides to manage one of the plants himself, and he hires another person to manage the second plant. For purposes of operating the second plant, who is the agent and who is principal? O A. We need more information to determine the identies of the principal and the agent in this case. O B. Bob is the agent and the manager is the principal O C. Both Bob and the manager are principals O D. Bob is the principal and the manager is Bob's agent

Explanation / Answer

The manager who is hired by Bob to manage the 2nd plant acts on behalf of Bob and the manager shouldn't have any conflict of interest in carrying out the managing act. In Principal- Agent relationship, this is what an agent do. Here Bob is a principal who assigns the agent (the manager) to carry out the task.

Answer- option D

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