An Example of Moral Hazard Is

question 10

Multiple Choice

An example of moral hazard is

• A)people drive less carefully in icy conditions with antilock brakes as without
• B)people drive as safely with more airbags as without
• C)football players avoid 'spearing' with their heads even with safer helmets
• D)people read the medicine warnings as carefully when self-medicating versus with a doctor's prescription

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Definitions:

Gross Method

An accounting practice where purchases are recorded at their full invoice amount without deducting any cash discounts.

General Journal Entries

The recordings of financial transactions in the general journal, including both the debit and credit sides of each transaction.

Gross Margin Ratio

Gross margin ratio is a financial metric that measures a company's gross profit relative to its sales revenue, indicating the efficiency of production and pricing strategies.

Relative Liquidity

A measure of the ease with which an asset can be converted into cash without affecting its market price, compared to other assets.