Bob Is Planning to Sell His Home

question 456

Multiple Choice

Bob is planning to sell his home. In preparation for the sale, he paints all of the ceilings in his house to cover up water stains from his leaking roof so that potential buyers will be unaware of this problem. This is an example of

• A)moral hazard.
• B)screening.
• C)adverse selection.
• D)the principal-agent problem.

---

Definitions:

Relative Market Shares

A metric comparing a company's market share to that of its largest competitor, highlighting competitive strength.

Hybrid Vehicles

Cars that use a combination of an internal combustion engine and one or more electric motors for propulsion, aiming to achieve better fuel efficiency and lower emissions than conventional vehicles.

BCG Business Portfolio

A matrix developed by the Boston Consulting Group to help businesses analyze their product lines or business units for strategic decision-making based on market growth and market share.

Compound Annual Growth Rate

The mean annual growth rate of an investment over a specified time period longer than one year, expressing the compound growth of an investment.