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:

Long-Term Investments-AFS

Available-for-Sale Long-term Investments are financial assets not classified as trading or held-to-maturity investments, valued at fair market prices with gains or losses reported in other comprehensive income.

Trading Securities

Financial instruments such as shares, bonds, or other securities that are purchased with the intention of selling them in the short term to profit from price fluctuations.

Debt Securities

Financial instruments representing money borrowed that must be repaid, such as bonds, bills, or notes.

Available-for-Sale Securities

Financial assets that a company intends to sell within a short period but can hold onto for an indefinite period, classified as neither held for trading nor held to maturity.