Moral hazard is the term used to describe the situation in which: people want to
ID: 1117553 • Letter: M
Question
Moral hazard is the term used to describe the situation in which:
people want to change their behavior after they have signed a contract or agreed to a specified behavior but are unable to do so.
people may change their behavior after they have signed a contract or agreed to a specified behavior.
a consumer is being compensated for a defective product.
a consumer may buy a low-quality product.
consumers receive a lower price because of a mistake on the part of the clerk.
A.people want to change their behavior after they have signed a contract or agreed to a specified behavior but are unable to do so.
B.people may change their behavior after they have signed a contract or agreed to a specified behavior.
C.a consumer is being compensated for a defective product.
D.a consumer may buy a low-quality product.
E.consumers receive a lower price because of a mistake on the part of the clerk.
Explanation / Answer
moral hazard is a situation in which the the party who is protected against the risk changes their behaviour after the aggregement is signed because they are protected against the risk in backend.
so answer here is B
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