Moral Hazard Is Due to

question 7

Multiple Choice

Moral hazard is due to

• A)hidden characteristics.
• B)hidden actions.
• C)symmetric information.
• D)adverse selection.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs - direct labor, direct materials, and overhead - in the cost of a product.

Net Operating Income

A company's revenue minus its operating expenses, not including taxes and interest.

Fixed Manufacturing Overhead

The total of all production costs that do not change with the level of production output, such as salaries of managers, rent, and property taxes.

Variable Costing

Variable Costing is an accounting method that only assigns variable costs to inventory, treating fixed costs as period expenses.