When Writing Contracts When Actions Are Unobservable, It Is Assumed

question 36

Multiple Choice

When writing contracts when actions are unobservable, it is assumed that, while the firm is risk _____________ and able to diversify its risk, the worker is risk _____________ because all of the worker's income is derived from the job.

• A) preferring, neutral
• B) neutral, averse
• C) averse, preferring

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Definitions:

Sales Prices

The set amount at which goods or services are sold to customers, influencing the business's revenue.

Salespeople

Individuals who are employed to sell products or services to customers.

Number Of Sales

quantifies the total sales transactions completed within a specific period, often used to gauge business performance.

Bonus

A form of additional compensation given to an employee or workers, above their normal pay, for achieving a certain level of performance or for special occasions.