What Is Moral Hazard

question 54

Multiple Choice

What is moral hazard?

• A)It refers to the private, self-interested actions that people pursue, which when taken collectively leads to a loss in economic surplus.
• B)It refers to the actions people take after they have entered into a transaction that makes the other party to the transaction worse off.
• C)It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction.
• D)It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.

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Definitions:

Automobile Accident

An unexpected event involving one or more vehicles on a roadway that results in damage or injury.

Paranoid Delusions

Unfounded suspicions or exaggerated mistrust of others, often a component of paranoid personality disorder or schizophrenia.

Positive Symptoms

Symptoms of certain mental health disorders which involve the presence of aberrant perceptions or behaviors, such as hallucinations or delusions.

Schizophrenia

A mental disorder characterized by disturbances in thought, perception, and behavior, leading to detachment from reality.