Refer to Scenario 17.4. Moral hazard would be eliminated in this situa
Refer to Scenario 17.4. Moral hazard would be eliminated in this situation if
A) the insurer would always charge $5000.
B) the insurer would always charge $10,000.
C) the insurer could costlessly monitor whether a flood control system is in place, and adjust the premium upward if it is not.
D) the insurer could costlessly monitor whether a flood control system is in place, and adjust the premium downward if it is not.
E) the flood did not occur.
ANSWER
C
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