An Example of Moral Hazard Is

question 5

Multiple Choice

An example of moral hazard is

• A) a situation where high-quality loan applicants drive low-quality loan applicants out of the market for bank loans.
• B) a situation where equally qualified men and women do not earn the same wages in the same occupation.
• C) a situation where individuals are not willing to pay top dollar for a used car because they assume it is a lemon.
• D) a situation where a person purchases life insurance and then lives recklessly.

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Definitions:

Early Adopters

Individuals or businesses who use or adopt new products, services, or technologies early in their life cycle, often influencing others in their purchasing decisions.

Opinion Leaders

Influential members of a community or group whose advice or example significantly influences others' attitudes or behaviors.

Diffusion of Innovation

The process by which a new idea, product, or behavior spreads through a population or social system over time.

High-rise Jeans

A style of jeans that has a waistband sitting high on or above the natural waist, typically considered to provide a more flattering fit.