Recall the Application about how having car insurance affects driving behavior to answer the following question(s).Recall the Application. The idea that an insured driver, who bears less than the full cost of a collision, will drive less carefully than an uninsured driver is an example of:
A. asymmetric information.
B. adverse selection.
C. moral hazard.
D. a thin market.
Answer: C
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A tax on suppliers will cause the ________ schedule to shift ________.
A. supply, right B. demand, right C. demand, left D. supply, left
Which of the following government outlays would be classified as a transfer payment?
A) payments of veterans benefits under the GI bill B) interest on the federal debt C) subsidies to gold-mining firms D) all of these
Which of the following is NOT a practice that prevents risk-shifting by a borrower?
A) limited-liability ownership B) placing liens on collateral C) personal guarantees D) restrictive covenants
If two economists disagree on an issue and their disagreement is based on personal value judgments, then this controversy is a normative one
a. True b. False