Question

In: Economics

if insurance is available on an​ activity, A. more of that activity will occur. B. less...

if insurance is available on an​ activity,

A.

more of that activity will occur.

B.

less of that activity will occur.

C.

investors will be less likely to hedge.

D.

it increases the risk of engaging in that activity.

Solutions

Expert Solution

Option A.

If insurance is available on an activity, then more of that activity will occur. This is because the insuree considers that the risk will be covered by the insurance and this will lead to more of the activity as compared to the case when risk will not be covered.

Rahul Sunny answered 2 years ago
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