As It Applies to Insurance, the Moral Hazard Problem Is

question 104

Multiple Choice

As it applies to insurance, the moral hazard problem is the tendency for

• A) those most likely to collect on insurance to buy it.
• B) those who buy insurance to take less precaution in avoiding the insured risk.
• C) sellers to price discriminate.
• D) sellers to restrict output and charge high prices.

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Definitions:

Financial Targets

Specified goals related to the financial performance of an organization, such as revenue, profits, or return on investment.

Sales Revenues

The total amount of money generated from the sale of goods or services before any expenses are subtracted.

Leverage

A means of gaining a strategic advantage through the use of a particular resource or capability.

Profitability

The state or condition of yielding financial profit or gain, typically measured over a specific period of time.