Suppose There Are Two Types of Fruit Pickers

question 19

Multiple Choice

Suppose there are two types of fruit pickers. Fast pickers bring in more than 10 units of fruit per day, while the slow pickers bring in fewer than 10 units per day. Johnson Farm pays pickers a flat rate of $50 per day, and Henry Farm pays pickers $5 for every unit picked. The pickers know their productivity level, but the farms don't know a picker's productivity until he or she starts working. There will be an adverse selection problem in applications at _____.

• A) Johnson Farm
• B) Henry Farm
• C) both farms
• D) neither farm

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Definitions:

Arson

The criminal act of deliberately setting fire to property, typically for malicious or fraudulent purposes.

Insurance Fraud

Illegally manipulating or fabricating claims with the intent to obtain undue financial benefit from an insurance policy.

White-Collar Crime

A category of non-violent crimes, usually committed in commercial situations for financial gain.

Corporate Crime

Illegal acts committed by a company or its employees that are designed to benefit the corporation financially or otherwise.