Which of the following would be an example of a principal trying to deal with a moral hazard problem?
a. The parents of an infant secretly place video cameras in their house before the baby-sitter arrives.
b. An insurance company checks police records to determine if its policyholders have received traffic citations.
c. An employer examines his workers' output on a daily basis.
d. All of the above are correct.
d
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Increases in the productivity of labor result partly from
A. increases in the quantity of labor. B. improvements in technology. C. the law of diminishing returns. D. reductions in wage rates.
Specialization and the division of labor typically result in
A) cost overruns. B) increased output. C) decreased output. D) a greater reliance upon imports.
If demand is perfectly inelastic, the price elasticity of demand is equal to:
A. 1. B. 0. C. infinity. D. a negative number between 0 and infinity.
In order to continue earning an economic profit, individual farmers must
A. Charge higher prices than their competitors. B. Continue to improve their productivity. C. Expand their rate of output until marginal cost equals zero. D. Charge lower prices than their competitors.