A Person Practices Poisonous Snake Charming and Does Not Reveal

question 32

Multiple Choice

A person practices poisonous snake charming and does not reveal this to her health insurance company before purchasing insurance. This is an example of

• A)moral hazard.
• B)adverse selection.
• C)signaling.
• D)screening.

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset which assumes the asset will lose an equal amount of value each year over its useful life.

Operating Expenses

are the costs involved in running a business that are not directly tied to the creation of a product or service, such as rent, utilities, and administrative salaries.

Cash Sales

Transactions where payment for goods or services is made at the time of sale in cash or its equivalent.

Cash Expenses

Expenses that a business or individual pays out in cash, excluding non-cash expenses such as depreciation.