A Problem for Equity Contracts Is a Particular Type of ________

question 5

Multiple Choice

A problem for equity contracts is a particular type of ________ called the ________ problem.

• A)adverse selection;principal-agent
• B)moral hazard;principal-agent
• C)adverse selection;free-rider
• D)moral hazard;free-rider

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Definitions:

Surplus

An excess amount of a commodity, product, or resource beyond what is needed or utilized.

Substitute Product

An alternative product that serves the same purpose or meets the same need as another.

Apple Juice

A beverage made by pressing and extracting the liquid from apples.

Orange Juice

A beverage made by extracting the liquid from oranges, often consumed for its nutritional value and taste.