What is trade off? what is moral hazard?
*Picture and statements are not related.
hi this is sora.
today, I will explain about these two economic words which are trade off and moral hazard.
At first, it is about trade off. it means that there are two options, and if you choose one of them, you would not choose another one anymore. For example, studying and hung out with friend, economic growth and environmental pollution. With regard to studying and hung out with friend, if you choose to study at home, you cannot enjoy time with friend. and vise versa. you cannot choose both options at same time. And when it comes to saying economic growth and environmental pollution. usually when economic growth is on-going, the condition of environment would be not good as before economic growth. when the smoke or polluted material from plants or industry will break natural environment and it will also give us bad influence. In this situation, you cannot choose both at same time. This is trade off.
Next, about moral hazard. This economic word means that preparing for all possibilities results in diminishing or weaking caution. typical example is car insurance. I am sure that you wound not understand what I wanted to explain because of my lack of knowledge. So, I need to give you an example. if you do not have car insurance when you drive a car, you would take care around you not to get car accident. but if you have car insurance, the caution of taking care around you would diminish, and the possibility that you have car accident would be increased. having car insurance makes you lost caution and sometimes it would lead you in accident. This is typical example of moral hazard.
この記事が気に入ったらサポートをしてみませんか？