In the Market for Insurance, the Moral Hazard Problem Leads

question 67

Multiple Choice

In the market for insurance, the moral hazard problem leads:

• A)those most likely to collect on insurance to buy it.
• B)those who buy insurance to take fewer precautions to avoid the insured risk.
• C)those with more prior insurance claims to be charged a higher premium.
• D)to none of the above.

---

Definitions:

Imposition of Tariffs

The act of a government applying taxes on imported goods to protect domestic industries and adjust trade balances.

Market Power

The capability of a firm to influence or control the price and output levels in a market.

Insulated

Protected from external influences or impacts, often used in the context of economies or markets that are shielded from global fluctuations.

Mutual Interdependence

A situation in oligopolistic markets where the actions of one firm affect the actions of other firms, leading to strategic planning and decision-making.