Liz starts driving rashly after buying insurance. This is an example of a(n)
A. negative externality.
B. common-resource problem.
C. free-rider problem.
C. moral-hazard problem.
- Liz starts driving rashly after buying insurance. This is an example of a moral-hazard problem.
Moral hazard is a term used in economics to show the phenomenon in which an individual is incentivized to increase his/her level of risk exposure since the individual is protected against the costs of the