________ means that as the number of employees a firm needs increases, it becomes increasingly difficult for it to find the right employees, place them in appropriate positions, and provide adequate supervision.
A) Difficult hazard
B) Adverse hazard
C) Adverse selection
D) Moral selection
E) Moral hazard

Question

Quizplus · Accepted Answer

Adverse selection refers to the difficulty that firms face in finding the right employees as they increase in number. This is because there may be a smaller pool of qualified candidates at higher levels, or candidate quality may decrease as the number of positions increase. Firms may also struggle to find the right fit for each position and to provide adequate supervision for all employees. A and B do not accurately describe this phenomenon, and D and E refer to different concepts.

________ Means That as the Number of Employees a Firm