Which of the following is an example of moral hazard?
a. When a family's belongings are protected against theft and they take special care to look after the house.
b. An individual buys a new auto insurance policy which includes a special payment if the car skids on the ice and the person then begins driving recklessly on ice.
c. When a country expects assistance in the event of a currency crisis and therefore takes special care to avoid such a crisis.
d. When decision-makers expect special assistance in the event of an unfavorable outcome and their behavior changes in such a way to avoid that outcome entirely.
e. When a person with health insurance takes great care not to catch a serious cold.
B
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According to the principle of diminishing marginal utility, as an individual consumes more and more of a good or service, the total utility increases while the marginal utility decreases
Indicate whether the statement is true or false
Many nations are consistently accused of enjoying the benefits of membership in the United Nations, yet they provide few or no funds to support the organization. This is an example of
A) the principle of rival consumption. B) the free-rider problem. C) the negative externality problem. D) the property rights problem.