question archive 1)Which of the following statement is correct about the term "moral hazard"? a
1)Which of the following statement is correct about the term "moral hazard"? a
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1)Which of the following statement is correct about the term "moral hazard"?
a. "Moral hazard" means that a person has violated a religious code,
b. "Moral hazard" means that people change their behavior after contracts are signed,
c. "Moral hazard" means that people are morally flawed,
d. "Moral hazard" relates to the tendency of people with characteristics undesirable to sellers to buy a good or service from those sellers.
2)Which of the following industries best describes an oligopoly?
a) A college campus with a single cafeteria,
b) A market for tutoring services where hundreds of college students offer tutoring for hundreds of high school students,
c) A market for babysitting where there are four babysitters,
d) A market for labor in a town with a single employer,
e) A market for water and sewage in a city where there is a single official water supplier.
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1) Which of the following statement is correct about the term "moral hazard"? b. "Moral hazard" means that people change their behavior after contracts are signed,
An example of a moral hazard would be buying insurance - either on your health or on your car. Moral hazard means that you are more likely to take chances with your driving or your health because you have insurance, which means you do not bear the full risk of your actions and choices.
2)
Which of the following industries best describes an oligopoly?
| a) A college campus with a single cafeteria, | No, this is a monopoly. |
| b) A market for tutoring services where hundreds of college students offer tutoring for hundreds of high school students, | No, this is approaching pure/perfect competition. |
| c) A market for babysitting where there are four babysitters, | Yes, this is the best answer because there are only a few sellers. |
| d) A market for labor in a town with a single employer, | No, a market with one buyer is called a monopsony. |
| e) A market for water and sewage in a city where there is a single official water supplier. | No, this is a government-regulated monopoly. |
