Economics 9708 · AS & A Level · Information failure

Information failure — practice question

What does the term moral hazard mean?

  • AAn increase in the likelihood of taking risks because another party is paying for these risks.
  • BThe loss of social welfare arising from the consumption of a good.
  • CWhen buyers and sellers have different amounts of information regarding product quality.
  • DWhen costs and benefits are taken into account when a decision is being made.

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