Robert got a new job and relocated to a different city. He ...

[madam-professor]

Robert got a new job and relocated to a different city. He initially decided to rent a small apartment close to his office.
 
  However, he decided to live in a much bigger and costlier apartment when he found out that his employer will pay him a house rent allowance. This is an example of ________. A) adverse selection
  B) moral hazard
  C) the prisoners' dilemma
  D) the free-rider problem

Question 2

When the price of a good spikes dramatically, the information conveyed in the market demonstrates that
 
  A) greed has increased among the suppliers.
  B) greed has increased among the demanders.
  C) the good has become more scarce than before.
  D) the good has become less scarce than before.

[af]

Answer to Question 1

B

Answer to Question 2

C