Answer:
- Notify his insurance company.
Explanation:
As per the question, if there is a case of a driver being associated in an accident, 'an instant news of the event must be reported to the closest law enforcement agency and the insurance company must be informed the earliest along with the details of the driver if possible.' This is because the law enforcement agency would take the necessary action against the alleged carelessness by filing a case against him/her while <u>conveying the timely information to the insurance company would assist you in making your claim process easier and smoother</u>.
This behavior is an example of Moral hazard
.
Option A
<u>Explanation</u>:
Moral hazard is a behavior occurs when a person increases his/her exposure to risk when insured or have a financial assistance. In this situation ''person takes more risks" because someone else is there to bear cost of risks. In the above situation, Martha used to spend less before but when she got the scholarship she started spending more as having a financial security of scholarship. Other options - pecuniary externality, the paradox of thrif and the free-rider problem are incorrect as do not have any relevance with the case of Martha.
Answer: A
Explanation:
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