________ means that as the number of employees a firm need 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 situation where one party in a transaction has information that the other party lacks, resulting in an unfair advantage for the informed party. In the context of the given statement, it means that as a firm needs more employees, it becomes harder to find qualified and suitable candidates, and the firm may have to settle for less skilled or appropriate candidates. This can lead to a decrease in the quality of work performed and an increase in the cost of supervision and training, making it an adverse selection hazard.

________ Means That as the Number of Employees a Firm