Suppose Dave Drives More Recklessly When He Has Car Insurance

question 70

True/False

Suppose Dave drives more recklessly when he has car insurance than when he does not have car insurance. This is an example of the moral hazard problem associated with insurance.​

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Definitions:

Profitability

A measure of the efficiency and effectiveness of a company in generating profit from its operations.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects cash from credit sales by comparing net credit sales with the average accounts receivable balance.

Net Credit Sales

The total amount of sales made on credit, subtracting returns and allowances.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.