The Case Where People Purposely Act in a Careless Way

question 112

Multiple Choice

The case where people purposely act in a careless way, for example, driving recklessly because they are insured, is called

• A) asymmetric information.
• B) risk aversion.
• C) moral hazard.
• D) bounded rationality.
• E) thrill-seeking.

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Definitions:

Perpetual Inventory System

An inventory recording technique that updates the inventory count and cost after each purchase or sale, providing a continuous record of inventory levels.

Gross Method

An accounting method where purchases and sales are recorded at their gross amounts before any trade discounts are taken into account.

Credit Terms

The agreed upon conditions between a buyer and a seller regarding the amount and timing of payment for goods or services.

Periodic Inventory System

An inventory system where stock levels and cost of goods sold are calculated at the end of an accounting period, rather than updated continuously.