Suppose That a Publisher Is Considering How to Pay an Author

question 82

Multiple Choice

Suppose that a publisher is considering how to pay an author for writing a book. The publisher would like the author to put forth his maximum effort, but the publisher is unable to observe the author's effort. Paying a fixed fee for writing a book ____ an example of moral hazard because ____.

• A) is; the publisher will not be able to determine whether the author is lazy
• B) is; the publisher has more information than the author
• C) is not; the publisher will not be able to determine whether the author is lazy
• D) is not; the publisher has more information than the author

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Definitions:

Coping

Coping entails the strategies and behaviors individuals use to manage stress, challenges, and emotional discomfort in an effort to preserve mental health.

Stress

A state of mental or emotional strain or tension resulting from adverse or demanding circumstances.

Adaptation-level Phenomenon

The psychological process by which individuals adjust their expectations based on their previous experiences.

Learned Helplessness

A condition in which a person suffers from a sense of powerlessness, arising from a traumatic event or persistent failure to succeed, leading to decreased motivation and learning capacity.