Which of the following is a problem of moral hazard?
A. A lender cannot distinguish good risk from bad risk borrowers.
B. Life insurance companies offer an average premium to smokers and non-smokers so they do not have to have two different premiums.
C. An individual who purchases auto insurance begins to leave his or her keys in the car while running into a store.
D. An auto insurance company charges higher premiums to younger drivers than what they charge to older drivers.
Answer: C
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Economic growth can be illustrated by an outward shift of the PPC
a. True b. False Indicate whether the statement is true or false
What is the main theoretical implication regarding the standard employer-based discrimination model?
A. Discrimination is not profitable. B. Discrimination can only occur in competitive labor markets. C. Discrimination can only occur if there are exactly two types of labor (e.g., white and black). D. Workers do not care if firms are discriminatory. E. Most firms are discriminatory.
Why does the economy’s aggregate demand curve have a negative slope?
What will be an ideal response?
Because of product differentiation in a monopolistically competitive market, the demand curve for an individual firm will be
A) horizontal. B) vertical. C) downward sloping. D) upward sloping.