Adverse selection problem

Reference no: EM1375607

John have many ice cream stores located across the nation. John does not like to work evenings and employee Marcy to work the store in the evening for $7.50 each hour. Marcy's friends come by each evening to visit with her and she gives them free cones. Is this an adverse selection problem or an incentive problem? Explain your rationale. What is the solution?

Reference no: EM1375607

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