Solutions to the Problems Created by Moral Hazard Include

question 131

Multiple Choice

Solutions to the problems created by moral hazard include:

• A)offering salespeople in stores a straight salary rather than a commission on sales.
• B)setting up many stores and restaurants that are part of a national chain as franchises, with the owner undertaking quite a lot of risk.
• C)allowing property owners to overinsure their buildings.
• D)diversification.

Comprehend information useful for evaluating the profitability or cost-effectiveness of departmental activities.

Allocate indirect expenses across departments based on various drivers (floor space, ad spots, sales).

Understand responsibility accounting and the creation of performance reports for department managers.

Apply cost allocation methods in the context of educational institution administrative, maintenance, and utilities expenses.

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Definitions:

Nobel Prize Winner

An individual awarded one of the Nobel Prizes, prestigious international accolades given annually across several categories including Peace, Literature, and various Sciences.

Muhammad Yunus

A Bangladeshi social entrepreneur, banker, economist, and civil society leader awarded the Nobel Peace Prize for founding the Grameen Bank and pioneering the concepts of microcredit and microfinance.

Entrepreneurship

is the activity of setting up a business or businesses, taking on financial risks in the hope of profit.

Sequential Steps

Ordered or successive actions or stages through which a process or activity is carried out.