Macroeconomics 20th Edition by Campbell McConnell,Stanley Brue,Sean Flynn

Exercise 20

Place an "M" beside the items in the following list that describe a moral hazard problem and an "A" beside those that describe an adverse selection problem.
A) A person with a terminal illness buys several life insurance policies through the mail.
B) A person drives carelessly because she has automobile insurance.
C) A person who intends to torch his warehouse takes out a large fire insurance policy.
D) A professional athlete who has a guaranteed contract fails to stay in shape during the off season.
E) A woman who anticipates having a large family takes a job with a firm that offers exceptional childcare benefits.