________ means that as the number of employees a firm needs increases, it becomes increasingly difficult for it to find the right employees, place them in appropriate positions, and provide adequate supervision.
A) Moral hazard
B) Adverse selection
C) Adverse hazard
D) Complex hazard
E) Complex selection

Question

Quizplus · Accepted Answer

This scenario describes adverse selection, which is a phenomenon where the pool of potential employees becomes increasingly diluted with lower quality candidates as the number of employees a firm needs increases. This can make it harder for the firm to find the right people for the job, as well as supervise them effectively. Moral hazard refers to a situation where a party is incentivized to take more risk due to being insulated from the consequences of their actions. Adverse hazard and complex hazard are not commonly used terms. Complex selection does not accurately describe the issue at hand.

________ Means That as the Number of Employees a Firm