Moral hazard is a
a. Pre-contractual problem
b. Post contractual problem
c. Post firing problem
d. None of the above
Question 2
A firm sells 300,00 . units per week. It charges 35 per unit, the average variable costs are 40, and the average costs are 55, the firm should
a. Shut-down as the firm is making a loss of 15 million per week
b. Shut-down as the firm cannot cover the variable costs
c. Both a and b
d. None of the above