Suppose One Person Buys a Copy of Consumer Reports and Gives

question 37

Multiple Choice

Suppose one person buys a copy of Consumer Reports and gives away free copies to all who request one. This is an example of

• A)free rider problem.
• B)moral hazard.
• C)adverse selection.
• D)economies of scale.

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Definitions:

Probability

The likelihood of a particular event happening.

Moral Hazard

A situation in which one party engages in risky behavior or fails to act in good faith because another party bears the consequences or costs.

Taxi Driver

An individual who operates a car for hire to transport passengers as a profession.

Piece-rate Garment Worker

describes an employee in the clothing manufacturing sector who is paid based on the number of pieces or units they produce, rather than receiving an hourly wage.