When a moral hazard problem exists for automobile driving, the marginal cost of driving
A) is lowered, and the amount of driving done is raised above the efficient level.
B) is lowered, and the amount of driving done is lowered below the efficient level.
C) is raised, and the amount of driving done is raised above the efficient level.
D) is raised, and the amount of driving done is lowered below the efficient level.
E) is raised above the efficient level, but market forces keep the total amount of driving is kept at the efficient level.
A
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The long-run aggregate supply curve is ________ because along it, as prices rise, the money wage rate ________
A) vertical; falls B) vertical; rises C) upward sloping; falls D) upward sloping; stays constant
If people have rational expectations and correctly estimate the effects of a change in government policy, when the economy is initially at full employment, any anticipated increase in aggregate demand will result in: a. a decrease in both aggregate demand and short-run aggregate supply
b. an increase in short-run aggregate supply that will maintain full employment. c. higher prices that will reduce aggregate demand to its original level. d. a decrease in short-run aggregate supply that will maintain full employment.