Abby Buys Health Insurance Because She Knows That She Has

Abby buys health insurance because she knows that she has health risks that wouldn't be obvious to an insurance company.Brad buys home owners insurance and then is less careful to make sure he's put out his cigarettes.The example with Abby

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.

Correct Answer:

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