Which of the following is NOT an example of moral hazard? an insured person not using preventive care, because he/she is insured against illness an uninsured patient incessantly visiting his doctor because he always thinks he is getting sick an insured person buying prescription shampoo because it is covered an insured person getting their teeth whitened because it is covered

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter20: The Problem Of Adverse Selection Moral Hazard
Section: Chapter Questions
Problem 20.2IP
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Which of the following is NOT an example of moral hazard?
an insured person not using preventive care, because he/she is insured against illness
an uninsured patient incessantly visiting his doctor because he always thinks he is getting sick
an insured person buying prescription shampoo because it
covered
an insured person getting their teeth whitened because it is covered
Transcribed Image Text:Which of the following is NOT an example of moral hazard? an insured person not using preventive care, because he/she is insured against illness an uninsured patient incessantly visiting his doctor because he always thinks he is getting sick an insured person buying prescription shampoo because it covered an insured person getting their teeth whitened because it is covered
Expert Solution
Step 1

Moral hazard refers to the situation where insured party acts careless because he thinks any loss if occured will be covered by the insurance company. He takes actions which he would otherwise not take if he was not insured.

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