Moral Hazard Is

question 126

Multiple Choice

Moral hazard is

• A) the tendency for people to enter into agreements in which they can use their private information to their own advantage and to the disadvantage of the less informed party.
• B) when one of the parties to an agreement has an incentive after the agreement is made to act in a manner that brings additional benefits to himself or herself at the expense of the other party.
• C) a situation in which only bad quality items are bought and sold.
• D) an action taken outside a market that conveys information that can be used by that market.

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Definitions:

DNA Nucleotides

The basic building blocks of DNA, consisting of adenine, cytosine, guanine, and thymine, which encode the genetic information.

Gene Mutation

Altered gene whose sequence of bases differs from the original sequence.

Founder Effect

A genetic phenomenon that occurs when a new population is established by a very small number of individuals, leading to a reduced genetic diversity.

Industrial Melanism

A phenomenon in which darker forms of species evolve in polluted environments, typically as a result of higher survival rate against predation.