When joe didn't have renter's insurance, he was very careful not to leave candles lit in his apartment and locked the door when he left. now that he has renter's insurance, he typically leaves candles burning all day and forgets to lock the door, because he knows that even if his apartment catches on fire or gets broken into, his insurance will cover it. which of the following economic problems is characterized in the story? a) the free-rider problem b) moral hazard c) government failure d) adverse selection

Moral hazard

Explanation:

In the example, we can see that Joe was very careful when he didn't have a renter's insurance. However, now that the situation has changed, he leaves candles burning all day and forgets to lock the door because he knows that even if something happens, someone else will pay for it.

Thus, this example has all the characteristics of a Moral Hazard.

d. i assume the underlined word is "role." reformat if it isn't.

explanation:

role is closest to part because when replacing words, "playing a vital decision," "playing a vital activity," and "playing a vital dollar" don't make logical sense. the only meaningful choice is "playing a vital part."

this fits one of merriam-webster's definitions of role: "a function or part performed especially in a particular operation or process."