Multiple Choice
You offer an extended warranty for your product that is purchased by a few customers.If the product typically fails 2% of the time,the claim rate will exceed 2% of warranty purchasers because
A) adverse selection will lead those who are more reckless to purchase the warranty
B) moral hazard will lead those who purchase to be more reckless
C) you systematically underestimate product failure rates
D) a and b.
Correct Answer:
Verified
Correct Answer:
Verified
Q6: A difference between moral hazard and adverse
Q12: An example of moral hazard is<br>A)people drive
Q23: Which is NOT an example of moral
Q24: To keep employees from shirking,you can invest
Q26: An example of moral hazard is<br>A)A taxi
Q29: The following is NOT an example of
Q30: An example of moral hazard is<br>A)people drive
Q32: Which is NOT an example of signaling
Q33: To keep employees from shirking,you can invest
Q78: An example of moral hazard is<br>A)workers working