Agent is paid $50k per year. Agent sometimes slacks off and surfs the internet. This slacking by the agent costs the principal $90k in revenue and this is the starting agency cost amount (that is, if the agent didn't slack off, she would generate an additional $90k in revenue for the principal - this number is separate from agent's salary). Assume without any monitoring or bonding mechanisms, this number would remain constant. Principal installs a computer program which allows the principal to view what the agent does on her work computer. The program costs $20k per year to use. Since she knows the principal is watching, the agent no longer surfs the internet. She instead reads the paper at times, but overall she slacks off less (although she still slacks off some). On account of working more, agent brings in an additional $70k in revenue.

In this hypothetical, how much (if any) did Principal reduce the original $90k agency cost?

A. $90k

B. $70k

C. $60k

D. $50k

E. None of the above