In insurance markets, moral hazard occurs when the behavior of
A) the insured person changes in a way that raises costs for the insurer, since the insured person no longer bears the full costs of that behavior.
B) the insurer changes in a way that raises costs for the insured person, since the insurer no longer bears the full costs of that behavior.
C) the insured person changes in a way that eliminates rising health care costs for the insurer, since the insured person no longer bears the full costs of that behavior.
D) the insured person has an incentive to under consume medical services, simply because the insured person no longer bears the full cost of medical services.
Answer: A
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