Which of the Following Is an Example of Moral Hazard

question 93

Multiple Choice

Which of the following is an example of moral hazard?

• A)​There are likely more cars of low quality than of high quality offered for sale without warranties in the used car market.
• B)​An individual who eats well and exercises regularly chooses not to purchase health insurance.
• C)​An individual drives less cautiously after obtaining automobile insurance.
• D)​A car salesman offers a full warranty on a used car for 90 days.

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Definitions:

Hedging

The use of cautious language to make statements less absolute, often to reduce risk or liability.

Confident Statements

Assertions made with certainty and assurance, often without hesitation or doubt.

Tentative Statements

Claims or assertions made with a degree of uncertainty, often used to express hypotheses or preliminary conclusions.

Headings

Titles or labels used in written material to organize content and indicate the start of new sections or topics.