Question

Moral hazard occurs when:

Answer 1

1) Moral hazard occurs when the individual does not tell the others all the risks associated with their actions, so the correct answer is:
D. an individual knows more about his or her actions than other people do.

for the second one:

the money lent will be x

so we have :

x+10%x=1000
(the money lent and the interest are 1000 together)

so: 110%x=1000

$\frac{110}{100} x=1000$

$\frac{11}{10} x=1000$
11x=1000
x=1000\11
x=909.09 - so they correct answer is A!

x=