Moral hazard
A) occurs when managers pursue maximization of profit without regard to the interests of society in general.
B) exists when either party to a contract has an incentive to cancel the contract.
C) occurs only rarely in modern corporations.
D) is the cause of principle-agent problems.
Correct Answer:
Verified
Q3: value of a firm is
A)smaller the higher
Q6: A price-setting firm
A) can lower the price
Q7: A risk premium is
A) a measure calculated
Q8: Economic profit
A) is a theoretical measure of
Q9: Which of the following statements is true?
A)
Q10: The principal-agent problem arises when
A) the principal
Q12: When economic profit is positive,
A) total revenue
Q14: When a firm is a price-taking firm,
A)
Q15: Which of the following is NOT a
Q16: A market
A) lowers the transaction costs of
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