You Own an Ice Cream Store and Are Concerned That

question 20

Multiple Choice

You own an ice cream store and are concerned that an employee may be giving generous scoops to friends and relatives and smaller scoops to some other customers. This is an example of

• A)a moral hazard problem.
• B)adverse selection.
• C)behavioral economics.
• D)signaling.

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Definitions:

Cash Stream

A cash stream represents the flow of cash in and out of a business, highlighting cash revenue from sales and cash expenses from operations.

Rate of Return

A financial metric used to measure the profit or loss of an investment relative to its initial cost.

Cross-Dock Facility

A logistics strategy where incoming materials are unloaded directly from suppliers' trucks and immediately loaded onto outbound trucks, reducing storage time and costs.

Operating Costs

Expenses associated with the day-to-day functioning of a business, excluding the cost of goods sold.