Bob Is Planning to Sell His Home

question 456

Multiple Choice

Bob is planning to sell his home. In preparation for the sale, he paints all of the ceilings in his house to cover up water stains from his leaking roof so that potential buyers will be unaware of this problem. This is an example of

• A)moral hazard.
• B)screening.
• C)adverse selection.
• D)the principal-agent problem.

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Definitions:

Metallic

Pertaining to metals, their properties, characteristics, or appearance.

Necessary Condition

A condition that must be present for an event or statement to be true or to occur.

Causal Factor

An element or condition that directly influences the occurrence of an event or the outcome of a process.

Bathroom Floor

The surface or part of a bathroom upon which one stands, often made of tile, linoleum, or other water-resistant material.