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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

How can moral hazard lead to more costly insurance premiums than one was expected?

To determine

The reason for higher cost premiums in the moral hazard scenario is to be determined.

Explanation

However, it has been seen that when people knows that they do not need to pay any amount out of their own pocket than they does not follow precautions for their health or firms security and willing to take more risk than the normal.

For example, in case of health insurance, persons take precautions regularly and follow all medical requirements when they do not have any policy and does not follow any medical rules when they have insurance policy...

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