Option A is correct. Moral hazard is the term that describes the difficulty of the principal to ascertain whether the agent has really put forth a best effort.
About Moral hazard
The possibility that a party did not enter into a contract in good faith or gave false information regarding its assets, obligations, or credit capacity is known as moral hazard. Moral hazard may also refer to a party's incentive to take exceptional risks in an effort to benefit before the contract is settled. Any time two parties reach an agreement, there is a potential for moral risks. Every party to a contract may be able to benefit from going beyond the guidelines outlined in the agreement.
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