Moral Hazard

question 141

Multiple Choice

Moral hazard:

• A) always happens when adverse selection is a problem.
• B) never happens when adverse selection is a problem.
• C) can happen when adverse selection is a problem.
• D) None of these statements is true.

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Definitions:

Implied Misrepresentation

A false statement or omission made indirectly or through implication that leads others into error.

Rescind

To retract, cancel, or annul a contract or agreement, reverting the parties to their respective positions prior to the agreement.

Petition

A formal written request, often to a court or a governmental institution, seeking a particular legal remedy or governmental action.

Damages

The monetary compensation awarded to a person as a result of a lawsuit or legal claim for harm or injury.