explore how the organization of a firm affects the way numerous important decisions are made. Among these decisions are how to require resources or inputs to production and how to ensure that workers and managers are acting in the best interest of the firm. Firms can decide to use internal resources to produce an input or rely on outside sources. In exploring the issues associated with employees working in the best interest of the firm, basic conflict between workers and managers, or the principal-agent problem is addressed. the types of incentives or monitoring leads to the managers making decisions and exerting efforts that are in the best interest of the stakeholders. 1) Think of an example of the principal-agent that you experienced first hand or read or heard about. What factors led to the problem? Were there serious adverse outcomes arising from the problem? What suggestions can you offer that would have reduced or eliminated the problem?