In the Case of an Insurance Policy,________ Occurs When the Existence

question 36

Multiple Choice

In the case of an insurance policy,________ occurs when the existence of insurance encourages the insured party to take risks that increase the likelihood of an insurance payoff; ________ occurs when those most likely to get large insurance payoffs are the ones who want to purchase insurance the most.

• A) moral hazard; insurance market discrimination
• B) moral hazard; insurance segregation
• C) moral hazard; adverse selection
• D) adverse selection; moral hazard