Moral Hazard Can Be Avoided By

question 36

Multiple Choice

Moral hazard can be avoided by:

• A)employers monitoring employee effort.
• B)removing the asymmetric information.
• C)employers incentivizing employees to maintain consistent effort.
• D)All of these statements are true.

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Definitions:

TVC

Total Variable Cost, the total of all costs that vary with the level of output.

Total Revenue

The entire amount of income generated by the sale of goods or services related to a company's primary operations.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or labor.

Fixed Costs

Fixed Costs are business expenses that do not change with the level of goods or services produced by the company.