Author Question: Mark works as a business development officer for a leading electronics company. His main task is to ... (Read 90 times)

mrsjacobs44 · **on:** Jun 29, 2018

Mark works as a business development officer for a leading electronics company. His main task is to meet potential clients in their respective offices and try to enter into a business deal with them.

Irrespective of the number of clients approached and deals made, Mark earns a fixed salary every month. Because his boss does not cross-check how many clients he meets in a day, Mark often does not meet all the clients that he is supposed to. His behavior is an example of ________. A) adverse selection
B) moral hazard
C) a positive externality
D) a pecuniary externality

Question 2

The government of Lithasia has decided to set a minimum price for certain agricultural products in order to safeguard the interests of farmers. This is an example of a ________.

A) price floor
B) price ceiling
C) Pigouvian tax
D) Pigouvian subsidy