​The Difference Between Moral Hazard and Adverse Selection Is

question 7

Multiple Choice

​The difference between moral hazard and adverse selection is

• A)​moral hazard has to do with unobservable characteristics of individuals
• B)moral hazard has to do with unobservable actions of individuals
• C)adverse selection is when individuals change their behaviors because of a contract
• D)​adverse selection is when you choose the wrong answer on a test

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Definitions:

P(A ∪ B)

The probability of the occurrence of at least one of two events, A or B, including the case where both events occur simultaneously.

Union Of Events

The set of outcomes that belong to either one or both of two or more events in probability theory.

Sample Points

Sample points are specific values or instances selected from a population or a set, which represent a portion of the population for analysis.

Independent Events

Events whose outcome or occurrence does not affect each other.