If the Moral Hazard Problem in Automobile Driving Were to Be

question 41

Multiple Choice

If the moral hazard problem in automobile driving were to be eliminated, the marginal cost of driving would be:

• A) lowered enough to pull the amount of driving back down to the efficient level.
• B) lowered enough to raise the amount of driving back up to the efficient level.
• C) raised enough to pull the amount of driving back down to the efficient level.
• D) raised enough to raise the amount of driving back up to the efficient level.
• E) lowered back down to the efficient level, relieving the stress on market forces.

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Definitions:

Marxian Inputs

Factors of production (labor, capital, etc.) as analyzed in Marxist economic theory, focusing on their exploitation and role in generating surplus value.

Production Function

A quantitative model that demonstrates how the inputs in the production process impact the goods or services output.

Supply Function

A mathematical expression that shows the relationship between the quantity of a good or service that producers are willing to sell and the price of the good or service.

Factor Price

The price of inputs used in the production of goods and services, such as labor wages or the cost of raw materials.