Which of the following describes a situation in which an employee exerts less effort than the owner desires because the owner cannot accurately monitor and enforce the employee's effort?
A)Moral hazard.
B)Employee hazard.
C)Situational hazard.
D)Professional hazard.
E)Occupational hazard.

Question

Quizplus · Accepted Answer

This is a classic example of moral hazard, where an employee may not put in the desired effort or take more risks because the consequences will not fall solely on them. The owner may not be able to accurately monitor and enforce their behavior, leading to a situation where the employee takes advantage of the situation. The other choices may not accurately describe this situation.

Which of the Following Describes a Situation in Which an Employee