If a Person Drives with Less Care After Purchasing Auto

question 92

Multiple Choice

If a person drives with less care after purchasing auto insurance, this situation would be an example of a(n) :

• A) Reverse wealth problem
• B) Negative externality problem
• C) Adverse selection problem
• D) Moral hazard problem

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Definitions:

Average Product

The average amount of output produced per unit of a specific input, like labor or capital, over a certain period.

Diminishing Returns

The principle stating that if one factor of production is increased while others remain constant, the overall returns will initially increase but will eventually decrease after a certain point.

Unit Of Labor

A measure of labor input, often referred to as one hour of work by an employee or worker.