1.)T is applying for health insurance and fails to disclose a medical condition that would increase the premium she would have to pay. This medical condition affects her risk of needing medical attention. This is an example of what type of agency cost?

a.Adverse selection

b.Shirking

c.Stealing

d.None of the above.

2.)The CFO just approved a new ERP system that will provides some very useful and insightful accounting information. If the system is well designed and used throughout the organization, the company will be able to completely eliminate agency costs.

a.True

b.False