Bundle: Managerial Economics, Loose-leaf Version, 5th + MindTap Economics, 1 term (6 months) Printed Access Card
5th Edition
ISBN: 9781337607995
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 20, Problem 1MC
To determine
Moral hazard problem.
Expert Solution & Answer
Explanation of Solution
Moral hazard refers to changes in the behavior of people after they have entered into a transaction that makes the other party in the transaction worse off. The person frequently visits the doctor since the person has insurance. Thus, option ‘d’ is correct.
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