Question

Automobile insurance companies have a problem with people who buy insurance and then driverecklessly or take less care to avoid losses after being insured. In other words, the automobileinsurance market is subject to_______.

A)asymmetric information.
B) market signaling.
C)moral hazard.
D)adverse selection.

Answer 1

Answer:

C)moral hazard.

Explanation:

Moral hazard is when a person increases their exposure to risk because they do not bear the full costs of that risk.