Carlos,who Knows Nothing About Construction,paid Joe to Remodel a Room

question 135

Multiple Choice

Carlos,who knows nothing about construction,paid Joe to remodel a room in his house.Two years later,one wall in the remodeled room crumbled because Joe used poor-quality materials.This illustrates which economic problem?

• A) Adverse selection
• B) Screening
• C) Moral hazard
• D) Signaling

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Definitions:

Mutual Influence

The effect or impact that two or more entities have on each other.

Positive Regard

The expression of acceptance and support to an individual irrespective of their actions or feelings, often considered essential in humanistic psychological approaches.

Source of Power

This pertains to the origin or basis from which an individual or organization derives the ability to influence or control outcomes.

Organizational Members

Individuals who belong to and participate in the structure and activities of an organization.