An Example of Moral Hazard Is​

question 12

Multiple Choice

An example of moral hazard is​

• A)​people drive as 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 fail to read the medicine warnings more often when self-medicating versus with a doctor's prescription         

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Definitions:

Short-Term Gain

A profit from the sale of an asset held for one year or less.

Investment Portfolio

An assortment of financial assets including stocks, bonds, commodities, cash, and equivalents, such as mutual funds and exchange-traded funds (ETFs).

Preferential Tax Treatment

Special tax rules that result in a lower tax rate or beneficial tax conditions for certain types of income or taxpayers.

Accumulated Straight-Line Depreciation

The total amount of depreciation expense recorded for an asset over its useful life, calculated using the straight-line method.