You Own an Ice Cream Store and Are Concerned That

question 20

Multiple Choice

You own an ice cream store and are concerned that an employee may be giving generous scoops to friends and relatives and smaller scoops to some other customers. This is an example of

• A)a moral hazard problem.
• B)adverse selection.
• C)behavioral economics.
• D)signaling.

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Definitions:

Days' Sales

A measure often used in the context of 'Days' Sales in Inventory' which indicates the average number of days it takes for a company to sell its inventory.

Raw Materials Inventory

Consists of the basic materials and components required to manufacture goods.

Production

The process of creating, manufacturing, or enhancing products or services for sale.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency in managing stock levels.