If a Tire Company Knows That Customers Buying Insurance for Their

Multiple Choice

If a tire company knows that customers buying insurance for their tires will increase the likelihood of being reckless,there is a problem of _____________.In order to combat this problem,the tire company should__________.

A) Adverse selection; obtain more information about the customer's driving record before selling insurance
B) Moral hazard; obtain more information about the customer's driving record before selling insurance
C) Adverse selection; require the customer to sign a contract that states that insurance does not cover tire repair for reckless driving
D) Moral hazard; require the customer to sign a contract stating that insurance does not cover tire repair for reckless driving