Suppose parents hire a baby sitter to take care for their young child while they go out to dinner. The parents want the baby sitter to play and read stories to their child while they are away, but the baby sitter would prefer to put the child to bed and watch television. Once the parents leave, if the baby sitter puts the child to bed and watches television, this is an example of ________.
A) moral hazard
B) the lemons problem
C) screening
D) adverse selection
A) moral hazard
You might also like to view...
One of the consequences of a rent ceiling set below the equilibrium rent is
A) decreased search activity. B) increased search activity. C) the establishment of landlord unions. D) surpluses of apartments. E) the elimination of the deadweight loss that would otherwise exist in the housing market.
In stage III of the demographic transition,
(a) the birth rate and the death rate are relatively low. (b) the birth rate and the death rate are relatively high. (c) the birth rate is relatively high and the death rate is relatively low. (d) the birth rate is relatively low and the death rate is relatively high.
The total social cost of production is equal to
A) external cost minus internal cost. B) internal cost minus external cost. C) external cost plus internal cost. D) internal cost plus opportunity cost.
Refer to the graph shown. Expansionary fiscal policy shifts the aggregate demand curve from:
A. AD0 to AD2 whether or not crowding out occurs. B. AD0 to AD2 but then back to AD1 if crowding out occurs. C. AD0 to AD2 but then out to AD3 if crowding out occurs. D. AD2 to AD1 and then from AD1 to AD0 if crowding out occurs.