Economics (AS & A Level) · May / June 2025 · Paper 32 · Question 4
9708Private costs and benefits, externalities and social costs and benefits
When might a moral hazard occur?
- AWhen a consumer does not have full information about a product.
- BWhen a person undertakes an activity that causes harm to another person.
- CWhen a person undertakes a risky activity, knowing another person bears the risk.
- DWhen the seller of a product has more information than the buyer.
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Correct answer: C. When a person undertakes a risky activity, knowing another person bears the risk.
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