The Basic Idea Behind Moral Hazard Is That ________

question 50

Multiple Choice

The basic idea behind moral hazard is that ________.

• A) some economic transactions impose an additional cost on society
• B) some economic transactions give rise to an additional benefit to society
• C) people tend to take more risks if they do not have to bear the costs of their behavior
• D) people do not reveal their true preference for goods that are non-excludable in consumption

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Definitions:

Kanban

A visual scheduling system that controls the logistical chain from a production point of view, aiming to improve manufacturing efficiency by limiting work-in-progress items.

Safety Stock

Additional inventory kept on hand to guard against stockouts caused by uncertainties in demand and lead-time.

Kanbans

A scheduling system for lean manufacturing and just-in-time (JIT) production that signals the need to move materials within a production facility.

Push Production

A manufacturing system where production is based on forecasted demand and items are produced and pushed to the next stage of the process regardless of actual demand.