A firm deciding to hire a secretary,bases its decision on how well the candidate is trained on certain software.This practice addresses:
A)Adverse selection
B)Moral hazard
C)Forced bankruptcy
D)None of the above

Question

A firm deciding to hire a secretary,bases its decision on how well the candidate is trained on certain software.This practice addresses:​
A)​Adverse selection
B)Moral hazard
C)Forced bankruptcy
D)​None of the above

Quizplus · Accepted Answer

Adverse selection refers to a situation where one party has more information than the other party, causing the latter to make an inefficient decision. In this case, the firm is trying to avoid adverse selection by hiring a secretary who is well-trained on certain software, indicating that they have the necessary skills for the job.

A Firm Deciding to Hire a Secretary,bases Its Decision on How