Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured. In other words, the automobile insurance market is subject to
A) asymmetric information.
B) market signaling.
C) moral hazard.
D) adverse selection.
Answer: C
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Harry and his wife are looking for a new house. However, they cannot decide where to buy the house. Harry wants to live in Santa Cruz, while his wife wants to live in Ontario
If Harry values living in Santa Cruz at $10,000 and his wife values living in Ontario at $15,000, in which place are they likely to buy a house?
An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services
a. True b. False Indicate whether the statement is true or false
This profit-maximizing (loss-minimizing) firm charges a price of _______.
A. $35
B. $40
C. $45
D. $55
Tobin’s q may be interpreted as a measure of
a) the quantity of a firm’s output b) the optimal quantity of output for a monopolist c) the relative importance of bond financing to equity financing d) the rate of return on capital divided by the cost of capital e) the useful life of physical capital