Which of the Following Occurs When Insurance Makes a Person

question 62

Multiple Choice

Which of the following occurs when insurance makes a person more likely to engage in risky behavior?

• A) lemon problem
• B) moral hazard
• C) adverse selection
• D) risk selection

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Definitions:

Mutually Exclusive Projects

Situations where the acceptance of one project results in the rejection of another project due to constraints such as budget or resources.

Economic Resource

Assets or inputs that can be used in the production or offering of goods and services that have economic value.

Fiscal Year

A one-year period used for financial reporting and budgeting that may not align with the calendar year.