Moral hazard
A. occurs when managers pursue profit maximization without regard to the interests of society in general.
B. is the cause of principal-agent problems.
C. occurs only rarely in modern corporations.
D. exists when either party to a contract has an incentive to cancel the contract.
Answer: B
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Which of the following statements is true of a barter system? a. In a barter system economy, no rates of exchange are defined
b. In a barter system economy, there are as many different rates of exchange as there are pairs of goods to trade. c. In a barter system economy, rates of exchange are expressed in goods per dollar. d. In a barter system economy, rates of exchange are expressed in dollars per good. e. In a barter system economy, rates of exchange are denominated in gold or silver.
Which of the following best describes the difference(s) between a model and a theory?
a. A theory is a more abstract representation, while a model is more applied or empirical representation. b. A model is a more abstract representation, while a theory is more applied or empirical representation. c. Theories are used to test models. d. Models have been proven, but theories are still being investigated.