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Managerial Economics · End Term · 10 May 2026 · January 2026 term · Set 1-2

Question 36: Moral hazard occurs when contracts are written in such a…

Question 36

+1 markOne correct option

Moral hazard occurs when contracts are written in such a way that

  1. A

    the interests of agent and principal converge

  2. B

    the interests of agent and principal diverge

  3. C

    agents will wish to maximize the principal's utility

  4. D

    production and risk-bearing eficiency are achieved

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Correct answer

  • B

    the interests of agent and principal diverge

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Question 36 of 36 in the IIT Madras BS Managerial Economics (Managerial Economics) End Term paper sat on 10 May 2026, in the January 2026 term (Managerial Economics 06 May 26). It carries 1 mark.

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