Upon Learning That His Auto Transmission Is About to Fail

question 45

Multiple Choice

Upon learning that his auto transmission is about to fail, Ray sells his car to an unsuspecting buyer. This circumstance illustrates the

• A) adverse selection problem.
• B) free-rider problem.
• C) moral hazard problem.
• D) principal-agent problem.

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Definitions:

Federal Laws

Laws passed by the national government of a country that are applicable throughout its entire territory.

Discriminate Hiring

The practice of unfairly treating individuals differently in hiring based on characteristics such as race, gender, age, or religion, often leading to biased or unjust outcomes.

Job Stress

The harmful physical and emotional responses that occur when the requirements of a job do not match the capabilities, resources, or needs of the worker.

Isolation

The experience of being separated from others, which can be physical or emotional, leading to feelings of loneliness.