Answer: Moral hazard
Explanation: Moral hazard can be defined as a situation when an individual increases his risk even when he has the option to no to, as he knows that he is insured and the potential loss will be bore by someone else.
In the given case Joe starting taking risk of fire as he knew that if there comes any loss, it will be bore by the insurance company. Hence the economic problem in this theory is Moral hazard .
Indirect.
This is because indirect tax is a tax on expenditure, whereas direct tax is a tax on income and wealth. Progressive taxes tax the rich more than the poor, but a sales tax charges everyone the same, therefore it is a regressive tax instead, as it takes up more of the poor's income. As it is not a choice, the answer is then an indirect tax.
Answer:
The journal entry for the same is shown below:
Explanation:
Retained earnings A/c.............Dr $500,000
Dividends payableA/c..........Cr $ 500,000
Cash dividend is declared by the board on 100,000 shares, therefore, the account of retained earnings is debited whereas the account of dividend payable is credited.
Working Note:
Amount = Shares × Price per share
where
Shares is 100,000
Price is $5 per share
= 100,000 × $5
= $500,000
Answer:
Compensatory Damages
Explanation:
Based on this scenario it can be said that Donald is entitled to Compensatory Damages. This is a lawsuit that covers the loss that the non-breaching party incurred as a result of the breach of contract. In this scenario, Donald's employer breached the contract by firing Donald before the twelve months. Therefore Donald can sue for compensatory damages which would be the amount of money that he would have made in the rest of the twelve months.