Options:
A.And the example with Brad illustrate adverse selection.
B.and the example with Brad illustrate moral hazard.
C. illustrates adverse selection; the example with Brad illustrates moral hazard.
D.illustrates moral hazard; the example with Brad illustrates adverse selection.
Answer:C. Illustrates adverse selection; the example with Brad illustrates moral hazard.
Explanation:
A Moral hazard is a term that is connected with Financial risks, a moral hazard has been described as the risk exposure especially of a financial nature caused by the activities and actions of another partner.
In insurance, it is also known as when a person increases their chances of exposure to risk because the burden arising from the risk is paid for or carried by another partner which may be an insurance company.
