Moral Hazard

question 181

Multiple Choice

Moral hazard:

• A)occurs when incentives are distorted because an individual knows more about his or her own actions than other people do.
• B)is a term used to describe the bonuses paid for particularly hazardous jobs (such as firefighting).
• C)is a term used synonymously with value judgment.
• D)refers to the questionable morality of price gouging in hazardous times (e.g. ,in the presence of famines or floods).

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Definitions:

Treble Damages

A legal award in a lawsuit that triples the amount of actual or compensatory damages, often granted in cases of willful wrongdoing.

Geographic Markets

Areas delineated by geographical boundaries within which a population might reasonably constitute a market for goods or services, often considered in economic and marketing analyses.

Monopoly

A market structure in which a single seller controls all production and sale of a particular product or service.

Sherman Act

A landmark federal statute in the field of United States antitrust law prohibiting monopolistic behaviors.