Perfect monitoring in a perfect market environment always provides an optimal contract. Explain why monitoring is not always the best choice, even in a well functioning market environment with low transaction costs.

Multiple choices are:

monitoring is not always successful

the cost of monitoring can exceed the expected costs of misbehavior

monitoring can be difficult

monitoring is always best

A and B

A and C

A and D

B and C

B and D

C and D

all but A

all but B

all but C

all but D

all are true