4111EconomicsMedium
Which of the following best demonstrates the problem of moral hazard?
AA life insurance company forces Enzo to have a medical examination prior to selling him insurance
BEnzo drives more recklessly after he buys car insurance
CJosephine doesn’t buy health insurance because it is too expensive, and she is healthy
DFatima chooses to attend a well-respected college
Correct answer
B. Enzo drives more recklessly after he buys car insurance
Explanation
The correct answer is Enzo drives more recklessly after he buys car insurance.