The Problem of Moral Hazard Arises Because

question 44

Multiple Choice

The problem of moral hazard arises because

• A)life is full of all sorts of risks.
• B)after people buy insurance,they have less incentive to be careful about their risky behavior.
• C)a high-risk person is more likely to apply for insurance than is a low-risk person.
• D)insurance companies go to great effort to avoid paying claims to their policy holders.

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Definitions:

Hydropower

A method of generating electricity by converting the energy of flowing or falling water.

Active Solar Heating

A system that uses solar energy to heat a fluid, usually water or air, and then circulates it to transfer heat directly to the interior space or to a storage system for later use.

Heat-Absorbing Fluid

A fluid that absorbs heat during a process, used in various applications such as heating and cooling systems.

Solid Biomass

Organic, non-fossil material of biological origin, such as wood, crops, and algae, used as a fuel.