Channel Stuffing Is a Practice That

question 36

Multiple Choice

Channel stuffing is a practice that

• A)is designed to attract as many downstream clients to a particular product as possible.
• B)allows customers more time to pay their accounts to entice them to buy as much as possible.
• C)permits retailers to sell way more products then they can possibly purchase.
• D)All of the choices are correct.

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Definitions:

Moral Hazard

Post-contractual increases in risky or negative behavior. Examples are reduced incentive to exercise care once you purchase insurance and reduced incentives to work hard once you have been hired. Moral hazard is similar to adverse selection in that it is caused by information asymmetry; it differs in that it is caused by hidden actions rather than hidden types.

Taxi Driver

A person employed to drive a car or van, which transports passengers to their chosen destinations for a fee.

Piece-rate

A payment method where workers are paid a fixed rate for each unit of production completed, encouraging productivity by directly linking pay to output.

Moral Hazard

A situation where one party takes on excessive risk because the negative consequences of the risk will be borne by another party.