Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 16, Problem 8Q
To determine
Reason for creation of moral hazard for
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What is moral hazard?
Explain how moral Hazard can lead to market failure.
Someone indicated that employee’s absence from work despite meeting the eight hours per day requirement affect productivity and increase cost of business. If an employee makes up the hours by coming early and leaving late, how can you call it an example of moral hazard when the manager can easily correct this behavior? Please explain to the class.
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Microeconomics (2nd Edition) (Pearson Series in Economics)
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- A Grab driver who does not own the car is very harsh on his driving as he knows that the car is not his. Is this an example of a moral hazard problem? How does moral hazard issue arise?arrow_forwardWhat would explain why moral hazard might not occur after the large gains in health insurance coverage?arrow_forwardCyclists travel faster on their bicycles when wearing helmets. Is this an example of adverse selection or moral hazard?arrow_forward
- What is overconsumption doing to our health?arrow_forwardExplain the term adverse selection and moral hazard and show how these lead to market failurearrow_forwardWhat is Moral Hazard, and how does moral hazard affect the likelihood a population demands medical care and the total demand for medical care?arrow_forward
- How do you think the problem of moral hazard might have affected the safety of sports such as football and boxing when safety regulations started requiring that players wear more padding?arrow_forwarddefine and explain the importance of moral hazardarrow_forward"Using the example of driving a car, explain moral hazard"arrow_forward
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