​Moral Hazard Implies That

question 16

Multiple Choice

​Moral hazard implies that

• A)​Insured individuals exercise less care because they have less incentive to do so
• B)Insured individuals exercise more care because they have less incentive to do so
• C)Insured individuals exercise more care because they have more incentive to do so
• D)​Insured individuals exercise less care because they have more incentive to do so

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Definitions:

Investments in Inventory

Funds allocated by a business to purchase goods and materials held for resale or production.

Minimum Costs

The lowest amount that can be spent on the production of a good or service while maintaining its quality.

Holding Inventory

The process of storing unsold goods or materials that a business intends to sell to generate revenue.

Ordering Costs

Expenses associated with placing orders for goods or services, including cost of paperwork, communication, and transportation.