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Managerial Economics · End Term · 13 Apr 2025 · January 2025 term

Question 40: Moral hazard occurs when contracts are written in such a…

Question 40

+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 efficiency are achieved

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Correct answer

  • B

    the interests of agent and principal diverge

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Question 40 of 40 in the IIT Madras BS Managerial Economics (Managerial Economics) End Term paper sat on 13 Apr 2025, in the January 2025 term (IIT M IMPROVEMENT AN EXAM QIM3 13 Apr 2025). It carries 1 mark.

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