Question: Q2 A. Differentiate a normative theory from a positive theory. Provide an example of each. One of the ways to reduce agency costs is to

Q2 A. Differentiate a normative theory from a positive theory. Provide an example of

each. One of the ways to reduce agency costs is to align an agent interest with a

principal interest, because the agency problem arises due to divergent interests.

Do you support this statement? Why? Explain in detail. [ 15 marks]

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