The Problem That Arises When a Party That Is Protected

question 159

Multiple Choice

The problem that arises when a party that is protected from risk behaves differently than if it were not protected from risk is

• A) moral hazard.
• B) diminishing returns.
• C) the principal-agent problem.
• D) adverse selection.
• E) market failure.

---

Definitions:

Poverty

A socio-economic condition characterized by a lack of financial resources necessary for basic living standards such as shelter, food, and healthcare.

Marxist

Pertaining to the theories and methodologies of Karl Marx, focusing on the role of class struggle in societal change and economic development.

Weberian

Pertains to the theories and concepts developed by sociologist Max Weber, focusing on social organization, authority, and the relationship between society and the individual.

Classes

Social strata that categorize individuals based on factors like wealth, income, education, occupation, and power.