Place an “M” beside the items in the following list that describe a moral hazard problem and an “A” beside those that describe an adverse selection problem a. A person with a terminal illness buys several life insurance policies through the mail. b. A person drives carelessly because she has automobile insurance. c. A person who intends to torch his warehouse takes out a large fire insurance policy. d. A professional athlete who has a guaranteed contract fails to stay in shape during the off season. e. A woman who anticipates having a large family takes a job with a firm that offers exceptional child care benefits.
Place an “M” beside the items in the following list that describe a moral hazard problem and an “A” beside those that describe an adverse selection problem a. A person with a terminal illness buys several life insurance policies through the mail.
b. A person drives carelessly because she has automobile insurance.
c. A person who intends to torch his warehouse takes out a large fire insurance policy.
d. A professional athlete who has a guaranteed contract fails to
stay in shape during the off season.
e. A woman who anticipates having a large family takes a job
with a firm that offers exceptional child care benefits.
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