Euro NCAP carries out crash tests on new cars in order to assess the extent to which

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Euro NCAP carries out crash tests on new cars in order to assess the extent to which they are safer than the minimum required. The cars are given a percentage score in four different categories, including adult occupant protection and child occupant protection. An overall safety rating is then awarded. Based on the test results in 2016, the Toyota Prius was judged to be the safest large family car on the market. If you observed that these cars were more likely to be involved in traffic accidents, could this be an example of adverse selection or moral hazard? Explain.

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Economics

ISBN: 978-1292187853

10th edition

Authors: John Sloman, Jon Guest, Dean Garratt

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