You cause an automobile liability insurance company to face a moral hazard problem when you take ________ driving precautions ________ you buy automobile liability insurance from the company.
A) fewer; after
B) more; after
C) fewer; before
D) the same; before and after

Question

Quizplus · Accepted Answer

Moral hazard occurs when a person takes more risks because they are protected from the consequences, in this case, by insurance. So, taking fewer precautions after buying insurance exemplifies moral hazard.

You Cause an Automobile Liability Insurance Company to Face a Moral