Moral Hazard Is

question 102

Multiple Choice

Moral hazard is:

• A) when people engage in behavior that is considered highly desirable by the person who bears the cost of the behavior.
• B) when buyers and sellers have different information about the quality of a good or the riskiness of a situation.
• C) when buyers and sellers with the same information about the quality of a good or the riskiness of a situation agree to a somewhat shady deal.
• D) the tendency for people to behave in a riskier way or provide less effort when they do not face the full consequences of their actions.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed by the government.

Market Value

The current price at which an asset or service can be bought or sold in an open market.

Opportunity Cost

What a business, investor, or individual forgoes in benefits when they decide on one choice over a different one.

Tax Rate

The percentage at which an individual or corporation is taxed by the government on their income or profits.