The Difference Between Adverse Selection and Moral Hazard Is That

question 71

Multiple Choice

The difference between adverse selection and moral hazard is that

• A)moral hazard happens at the time parties enter into a transaction; adverse selection occurs after the transaction takes place.
• B)adverse selection happens at the time parties enter into a transaction; moral hazard occurs after the transaction takes place.
• C)moral hazard is the motive that is behind one party entering into a transaction with another party.Adverse selection refers to the other party being harmed by the transaction.
• D)moral hazard refers to the likelihood that a transaction will lead one party to be better off at the expense of the other party to the transaction.Adverse selection refers to the consequences of the transaction after it has occurred.

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Definitions:

Emergency Help

Immediate assistance or aid provided during a crisis or when someone is in need.

Crowd

A large group of people gathered together, typically in a disorganized or unruly way.

Prosocial

Behavior that is intended to benefit others, including acts of kindness, sharing, and cooperating.

Antisocial

Behavior that opposes the societal norms, exhibiting disregard for the well-being of others.