When Sam Makes an Agreement and Then Behaves After the Agreement

question 21

Multiple Choice

When Sam makes an agreement and then behaves after the agreement in a way to increase his benefits and harm then other party to the agreement,Sam is illustrating

• A) moral hazard.
• B) adverse selection.
• C) signaling.
• D) the cost of contracting.
• E) a pooling equilibrium.

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Definitions:

Landlords

Property owners who rent out real estate to tenants for a periodic payment, usually monthly.

Quality of Housing

A measure of the condition, facilities, and attributes of housing units, which affects the well-being and satisfaction of residents.

Tax

An obligatory fiscal contribution or another kind of tax levied on an individual by a government authority to support government budgets and various public spending.

Price Paid

The amount of money that is exchanged for a good or service.