Describe moral hazard with an example.
What will be an ideal response?
Student examples will vary. A sample answer follows.
Moral hazard describes a situation in which information asymmetry increases the incentive of one party to take undue risks or shirk other responsibilities because the costs incur to the other party. For example, allowing banks to commit undue risk taking in lending is an example of moral hazard.
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Casualty insurance can be provided in either named-peril policies or open-peril policies
Indicate whether the statement is true or false
Once a company decides to use indirect rather than direct distribution, it must choose one of the three strategies of distribution. Discuss what each choice means in terms of product availability to final consumers.
What will be an ideal response?
In the context of virtual reality (VR), _____ refers to allowing users to move around freely by combining interactive environments with cameras, monitors, and other devices
Fill in the blank(s) with correct word
Safety stock exists for which of the following reasons?
A. To provide protection against the uncertainties of supply and demand B. To allow for transportation time C. To allow less expensive purchases by buying more D. None of the above