All the major appliance manufacturers within a country realize the industry is in trouble. They decide to cut off ties with all foreign imports and focus only on domestic suppliers as a way to cut costs. They agree that if this doesn't work out, it really doesn't matter because the government will bail out the industry. This is an example of

Question

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This scenario is an example of a moral hazard because the manufacturers are taking a risk (cutting off foreign imports) with the expectation that they will not bear the full consequences of failure, as they believe the government will bail them out.

All the Major Appliance Manufacturers Within a Country Realize the Industry