Moral Hazard Occurs When a Person's Behavior Changes in a Way

question 6

Multiple Choice

Moral hazard occurs when a person's behavior changes in a way that

• A)is immoral
• B)is inherently dangerous
• C)increases the chances of an unfavorable outcome
• D)increases the likelihood of profit
• E)raises the net welfare of society

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that suppliers are willing to sell.

Exit

The process by which businesses cease operations and leave a market, often due to unprofitability or strategic realignment.

Economies of Scale

The cost advantages that enterprises obtain due to scale of operation, with cost per unit of output generally decreasing with increasing scale.

Technology

The application of scientific knowledge for practical purposes, especially in industry.