Which of the Following Is an Application of the Moral-Hazard

question 14

Multiple Choice

Which of the following is an application of the moral-hazard problem?

• A)a person buying insurance after a cancer diagnosis.
• B)an salesperson who is not paid on commission being rude to customers.
• C)coffee hounds buying the menu item meant for lower-demand consumers.
• D)only inexperienced workers applying for a managerial job advertised with a relatively low salary.

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Definitions:

Nominal Wage Rate

The wage rate paid to employees unadjusted for inflation, representing the amount of money received per unit of time.

Real Wage Rate

The compensation received per hour of work after adjusting for inflation, indicating the actual value of wages.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, used as an indicator of inflation.

Nominal Wage Rate

The wage rate paid to employees expressed in current dollars, without adjustment for inflation or purchasing power.