The new Camaro SS has a 6.2-liter V8 engine that puts out over 400 horsepower. At the racetrack, the Camaro runs the quarter mile in an impressive 12.9 seconds at 117 mph. General Motors provides a three-year warranty on the Camaro. How might the factory warranty set up a moral hazard? What could General Motors do to mitigate the moral hazard?

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The Answer of The new Camaro SS has a 6.2-liter V8 engine that puts out over 400 horsepower. At the racetrack, the Camaro runs the quarter mile in an impressive 12.9 seconds at 117 mph. General Motors provides a three-year warranty on the Camaro. How might the factory warranty set up a moral hazard? What could General Motors do to mitigate the moral hazard?

The New Camaro SS Has a 6