Consider the Following Two Situations

question 104

Multiple Choice

Consider the following two situations. Nicole accepts a job where she will be driving in dangerous traffic, so she seeks auto insurance. After Braden buys health insurance, he visits the gym less frequently. Which of these person's actions illustrates moral hazard?

• A)both Nicole's and Braden's
• B)Nicole's but not Braden's
• C)Braden's but not Nicole's
• D)neither Braden's nor Nicole's

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Definitions:

Revenue

Income generated from normal business operations, often from the sale of goods and services to customers.

Credit Customer

A customer who purchases goods or services on credit, agreeing to pay at a later specified date.

Expense

Money spent or cost incurred in an entity's efforts to generate revenue.

Asset

Resources owned by a business or individual that have economic value or future benefit.