One reason that insurance companies must regularly deal with imperfect information is because:
a. customers routinely hide information that might embarrass them.
b. the mix of individual and corporate customers is inherently imperfect.
c. it is impossible to predict future events with certainty.
d. they routinely sell many different types of insurance products.
c. it is impossible to predict future events with certainty.
All insurance involves imperfect information. One reason is that future events cannot be predicted with certainty. For example, it cannot be known with certainty who will have a car accident, become ill, die, or have his home robbed in the next year.
You might also like to view...
Three firms agree to operate as a monopoly and charge the monopoly price of $40 for their product and (jointly) produce the monopoly quantity of 50,000 units. If the competitive price for the product is $35, under the Clayton Act these three firms face treble damages of ________.
A) $1,000,000 B) $250,000 C) $3,000,000 D) $750,0
The American Recovery and Reinvestment Act cost an estimated how much?
a. $631 million b. $731 million c. $831 million d. $931 million
The application of statistical methods to empirical questions in economics is known as
A. positive economic analysis. B. normative economic analysis. C. the scientific method. D. econometrics.
Which of the following most likely occurs when an inflationary gap exists?
A. Rising inventories. B. More layoffs. C. Excessive saving. D. Producers will use overtime shifts and strain capacity.