Which of the Following Is the Best Explains the Moral

question 62

Multiple Choice

Which of the following is the best explains the moral hazard problem?

• A)Chronically ill people are more likely to purchase health care insurance.
• B)Only owners of poor quality used cares put them up for sale.
• C)People who are highly risk-averse are less likely to invest in the stock market.
• D)Drivers with airbags in their cars drive a little more recklessly.

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Definitions:

Shareholders

Individuals or entities that own shares in a corporation, thereby holding a portion of its equity.

Directors

Members of a company's board who are elected by shareholders to make important decisions regarding the company's management and policies.

Officers

Executive members of an organization responsible for managing its day-to-day operations and making significant business decisions.

Due Care

The level of judgment, caution, and attentiveness expected of a reasonable person.