'Moral Hazard' Describes Contexts in Which an Employee Prefers to Exert

question 43

True/False

'Moral hazard' describes contexts in which an employee prefers to exert less effort than the effort that the owner wants because the employee's effort cannot be accurately monitored and enforced.

---

Definitions:

Average Variable Cost

The total variable costs divided by the quantity of output, representing the variable cost per unit of output produced.

Average Total Cost

The total cost of production divided by the total output or quantity produced, indicating the cost per unit of output.

Average Fixed Cost

The fixed costs of production (costs that do not change with the amount of output) divided by the quantity of output produced.

Profit-Maximizing Monopolist

A monopolist who adjusts the price or quantity of the product to maximize profit, considering the market's demand curve.