Problem
1. A club charges a flat fee for an open bar (all-you can-drink). Describe the moral-hazard problem.
2. Imagine that you own a bagel shop, which you visit once a day. According to company policy, employees are supposed to pay for all the bagels they eat. Why is moral hazard likely to be a problem in this situation, and what could you do to prevent it?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.