Which scenario best illustrates the concept of moral hazard?

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Once Gull obtains fire insurance, he starts smoking cigarettes while lying in bed.None of the given situations represent moral hazard.Mahmood, feeling unwell, decides to purchase health insurance.Every example provided reflects moral hazard.

Explanation

Option A demonstrates moral hazard because Gull's behavior becomes riskier after acquiring fire insurance, increasing the likelihood of a fire. The other options do not illustrate moral hazard since they either involve seeking insurance without increased risk-taking or deny the presence of moral hazard.