An example of moral hazard is
a. workers shirking when the boss is not looking
b. health care insured dieting and exercising
c. drivers of safer cars turning their phones off before driving
d. borrowers investing their loan proceeds exactly as the bank requires
a
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Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would
A) increase the measured labor force participation rate. B) increase the measured unemployment rate. C) decrease the number of persons in the labor force. D) decrease the number of persons in the working-age population.
What is the principal-agent problem?
What will be an ideal response?
The market for used cars is shown in the above figure. Buyers cannot tell whether any given car is a lemon. Ten percent (10%) of all cars are lemons. Which of the following statements is true?
A) All of the cars will be sold. B) No cars will be sold. C) Only lemons will be sold. D) Only good cars will be sold.
Price floors and price ceilings
A) always reduce total surplus. B) reduce consumer surplus and increase producer surplus. C) reduce producer surplus and increase consumer surplus. D) Not enough information to determine.