Which of the Following Would Be an Example of a Moral

question 191

Multiple Choice

Which of the following would be an example of a moral hazard problem?

• A) a person in poor health who purchases life insurance
• B) a person who is taxed on the purchase of a carton of cigarettes
• C) a person who purchases auto insurance and then drives more recklessly
• D) a person who receives a subsidy from the Federal government to insulate a home

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Definitions:

Intangibles

Assets owned by a company that don't have physical substance but have value, such as patents, trademarks, and copyrights.

Intangible Assets

Refers to non-physical assets that have value, such as patents, trademarks, goodwill, and copyrights.

Finite Life

Refers to assets or investments that have a defined time period over which they are expected to generate returns or be useful.

Amortize

The process of paying off a debt over time through regular payments, which can include portions of both principal and interest.