Scenario 22-1 Esteban and Michaela Own an Apartment Building. They Hire Nico

question 431

Multiple Choice

Scenario 22-1
Esteban and Michaela own an apartment building. They hire Nico to manage the building and deal with tenants' complaints. They also hire Ted to make any necessary repairs to the apartments or the common area and they hire Rex to be the door guard at night.
-Refer to Scenario 22-1. Which of the following is an example of a moral hazard problem?

• A)Ted steals $5 off the counter in a tenant's apartment while he is there to repair a leaky faucet.
• B)Esteban and Michaela do not tell Nico that they are planning to sell the building at the end of the year.
• C)Esteban goes golfing while Michaela reviews the financials from the business.
• D)Rex is paid an efficiency wage to ensure productivity because he is usually not monitored while working.

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Definitions:

Specialized Intellectual Abilities

Unique or distinct cognitive capabilities that are more developed in some individuals than others, allowing for exceptional performance in certain tasks or fields.

Fluid Intelligence

The ability to solve new problems, use logic in new situations, and identify patterns, independent of acquired knowledge.

Reason

The capacity for consciously making sense of things, applying logic, and establishing and verifying facts.

Correlations

Statistical measures that describe the extent to which two variables change together, indicating a relationship or association between them.