Insurance companies provide higher insurance premiums to plans with lower deductibles as a way of:

A. reducing the lemons problem.
B. avoiding moral hazard.
C. screening between types of drivers.
D. optimizing information acquisition.


Answer: C

Economics

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The following are the equations for the supply and demand curves in the market for weezils: Demand: Qd= 20?2P Supply: Qs= 5 + 3P where Qdis the quantity demanded, Qsis the quantity supplied, and P is the price per weezil in dollars. Refer to Exhibit 4-1. According to the data given, the equilibrium price of a weezil is

A. $3. B. $5. C. $11. D. $14.

Economics

Which of the following is a pure public good?

a) a library book b) public transportation c) the judicial system d) an interstate highway e) all of the above

Economics

The use of high leveraging by banks leads to the banking system's:

A. Competitiveness B. Instability C. Vital role in the economy D. Monopoly power

Economics

An economy has two workers, Jen and Rich. Everyday they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one TV?

A. 12 radios B. 3 radios C. 1/5 radio D. 1/3 radio

Economics