Consider a potential trading relationship between a law firm and a business client. The marginal cost of production for the law firm is given by MC = 2q, where q is the quantity of legal services provided. The demand curve for the client is MB = 150 – q. Note, however, that it is difficult to ascertain how many unit of legal service are actually provided. To (partially) remedy this, the law firm can adopt a recording system at a cost of $150. Similarly, for $150 the client can implement an auditing system to try to verify the number of legal services actually provided by the law firm. However, even if both firms implement the auditing and recording systems, only 30 units of legal services will actually be traded. What is the total agency cost? a. $800 b. $900 c. $1000 d. $1100 e. None of the above

Consider a firm wishing to use the services of a consultant. The marginal benefit for the firm is given by MB = 120 – q, where q is the quantity of services provided. The marginal cost of those services for the consultant is given by MC = 2q. The issue for the parties is that it is difficult to verify the actual quantity of consulting services provided. To help mitigate this the firm can hire an auditor at a cost of $100. Similarly, the consultant can use some recording keeping techniques that cost $200. Even with both of these actions, if the consultant provides less than 60 units of the service it will look like zero quantity was provided to a third party (like a court enforcing the contract). What is the total agency cost in this case? Using the help of a diagram, explain your answer. What if the auditing service instead cost the firm $1000 and the record keeping technology cost the consultant $1000 – what would the total agency cost be in this case? Explain your answer

A law firm is going to designate associates and partners to a big new case. The daily rate charged to the client for each associate is $500 and the daily rate for each partner is $1400. The law firm designated 3 times as many associates as partners to the case and was able to charge the client $5800 per day for these lawyers' services. Determine the number of associates assigned to the case and the number of partners assigned to the case.

A Chartered accountant in practice issued a certificate showing original cost ofplant and machinery installed in premises of a client for Rs. 9 crores to save someregulatory fees for his client. However, original cost of plant and machinery wasRs.15 crore as per records of client. Which fundamental principle governingprofessional ethics is violated in this case

A law firm received $2 000 cash for legal services to be provided in the future. The full amount was credited to the liability account Revenue Received in Advance. If the legal services have been provided at the end of the accounting period and no adjusting entry is made, this would cause: Group of answer choices expenses to be overstated. profit to be overstated. liabilities to be understated. revenues to be understated.

Each year the demand for lawyers remains constant. However, the number of law graduates continually increases each year. Assume these graduates wish to work in the legal profession. The supply and demand curves mentioned below refer to the market for legal services. Answer the following questions: a. The increased number of law graduates will affect which curve and in what way? . Type DR for Demand shifts Right, DL Demand shifts Left, SR Supply shifts Right, SL Supply shifts Left or U for Unknown. b. If the government introduces a series of banking laws that require all Australians to have legal representation when applying for a bank loan, which curve will be affected and in what way? . Type DR for Demand shifts Right, DL Demand shifts Left, SR Supply shifts Right, SL Supply shifts Left or U for Unknown. c. Combining your answers from both parts a and b, what would be expected to be the impact on price for legal services? . Type I for Increase, D for Decrease, S for remains the Same or U for Unknown.