Donald Has a Beach House on the Outer Banks of North

Multiple Choice

Donald has a beach house on the Outer Banks of North Carolina that was severely damaged in the most recent hurricane to strike the coast.Due to beach erosion,he has rebuilt twice in the past 20 years.He is intent on rebuilding,confident that government-provided flood insurance will cover his expenses.This is an example of:

A) how market-based solutions to problems are superior to government solutions.
B) moral hazard.
C) adverse selection.
D) asset substitution.
E) none of the above.