John goes to work 8 hours per day,but while he is at work he spends most of his time visiting internet sites that provide him with information on his favorite hobby.This is an example of
A) the Condorcet Paradox.
B) signaling.
C) moral hazard.
D) screening.

Question

Quizplus · Accepted Answer

This is an example of moral hazard as John is not using his time productively at work and is instead engaging in personal activities. Moral hazard refers to the situation where one party takes risks because they know they will not bear the full cost of those risks, and in this case, John is taking advantage of the fact that his employer is paying him for his time but he is not fully utilizing it for the benefit of the company.

John Goes to Work 8 Hours Per Day,but While He