Moral Hazard Describes a Situation in Which

Multiple Choice

Moral hazard describes a situation in which:

A) the buyers of insurance consistently make the wrong decisions and buy too much insurance.
B) insurance companies are unable to sell the amount of insurance they feel is optimal.
C) insurance companies find most of their customers coming from low risk groups.
D) the buyers of insurance behave in ways that raise the probability of the unfavorable outcome.