If Sally drives less carefully after buying auto insurance, she illustrates
A) adverse selection.
B) negative selection.
C) moral hazard.
D) lemon hazard.

Name: If Sally drives less carefully after buying auto insurance, she illustrates A) adverse selection. B) negative selection. C) moral hazard. D) lemon hazard.
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Question

Quizplus · Accepted Answer

Moral hazard occurs when an individual takes more risks because they do not bear the full consequences of those risks, often due to having insurance coverage.

If Sally Drives Less Carefully After Buying Auto Insurance, She