If an Individual Is Less Careful About Avoiding Accidents or Illness

question 227

Multiple Choice

If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of

• A) the free-rider problem.
• B) the moral hazard problem.
• C) the adverse selection problem.
• D) the Coase theorem.

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Definitions:

Departmental Gross Profit

The gross profit of a specific department within a store or company, calculated by subtracting the cost of goods sold in that department from its sales revenue.

Assets

Properties (resources) of value owned by a business (cash, supplies, equipment, land).

Liabilities

Obligations that come due in the future. Liabilities are the financial rights or claims of creditors to assets.

Departmental Accounting

An accounting method that tracks the income and expenses of individual departments within a company, helping in performance assessment and budgeting.