Economics

ML3. [2 pts] If I leave students unsupervised during an exam, does that represent a potential problem of [a] Adverse selection [b] Moral Hazard [c] Neither [a] nor [b] Pick one. MIA. [5 pts] Topside Tiles, which produces roong tiles, is a local monopoly. [ts inverse demand function is p=1002Q, and its constant marginal cost is 20. The owner has delegated the decision of how much output to produce to the plant manager. The manager's income, Y, is 5% of revenue: Y=0.05R. Show that a manager who wishes to maximize income, Y, will choose an output that exceeds the prot-maximizing level. ls there a conflict of interest between the owner and manager? If so, is this caused by Moral Hazard or Adverse Selection