Automobile insurance companies insure both safe and unsafe drivers. Ideally they would like to be able to charge different premiums to each to reflect the cost differences in insuring both types of drivers
What type of economic problem is this and how might insurance companies deal with it?
This is a problem of imperfect information. There are a variety of ways in which insurance companies can deal with this issue. First, insurance company can examine the motorist's driving record to determine if there has been a history of moving traffic violations. The age of the driver might also be a factor as insurance companies are well aware that lack of experience is a major cause of accidents. Lastly it can require that drivers pay a deductible when there is an accident. Insurance companies could charge higher premiums to motorists who choose lower deductibles and vice versa. These are methods by which the insurance company is attempting to push part of the cost burden back to the motorist.
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Monetarists emphasize
a. crowding-out but not the liquidity trap. b. crowding-out and the liquidity trap. c. the liquidity trap but not crowding-out. d. neither crowding-out nor the liquidity trap.
A labor market is divided into two segments. All workers have the same qualifications and find jobs in either segment equally attractive. Initially, both segments are in competitive equilibrium. If the development of employer prejudice then reduces the employment of minorities in one segment, there will be a
a. permanent drop in labor supply to the discriminating segment b. permanent increase in labor supply to the nondiscriminating segment c. temporary drop in labor supply to the discriminating segment d. permanent drop in labor demand to the discriminating segment e. temporary drop in labor demand to the nondiscriminating segment
Which of the following increases the likelihood that a group of sellers can increase profits as the result of collusion?
a. the presence of a large number of firms in the industry b. intense quality competition among firms c. low barriers to entry into the industry d. a stable demand for the product
Which of the following would not be included in the calculation of this year's GDP?
A) a headlight bulb purchased at Joe's Auto Supply by Olivia to replace a burnt out bulb in her car B) a headlight bulb purchased by Ford Motor Co. from a supplier C) a headlight bulb produced but not sold this year and thus ending up as inventory D) none of the above, i.e., all would be included