Insurance is possible and can be profitable because of A- private informatiom B- adverse selection' C-...

Insurance is possible and can be profitable because of

A- private informatiom

B- adverse selection'

C- consequence are risk aversion

D- moral hazards

E- All of the above

Solutions

Expert Solution

Ans.- (C)

Consumers are risk averse and therefore they are willing to pay premium in order to get insured and hence insurance companies make profits.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

insurance is possible and can be profitable because of a-private information b-adverse selection c-consumers are risk...

insurance is possible and can be profitable because of a-private information b-adverse selection c-consumers are risk aversion d- moral hazard e-all of the above

What is the adverse selection problem? How does adverse selection affect the profitable management of an...

What is the adverse selection problem? How does adverse selection affect the profitable management of an insurance company?

What are adverse selection problems? How does adverseselection affect the profitable management of an insurance...

What are adverse selection problems? How does adverse selection affect the profitable management of an insurance company? Write 200 words.Please don't copy from anywhere. Write in your own words.

Social insurance programs are not subject to adverse selection. A. True B. False C. Uncertain

Health care markets may be inefficient because of A. poor information. B. adverse selection. C. moral...

Health care markets may be inefficient because of A. poor information. B. adverse selection. C. moral hazard. D. all of these answer options are correct.

Adverse selection can lead to collapse of health insurance market through adverse selection death spiral. Although...

Adverse selection can lead to collapse of health insurance market through adverse selection death spiral. Although adverse selection can be observed in any insurance market, we do not observe adverse selection in many cases. Name reasons why adverse selection may not occur in real markets. Explain each reason

briefly describe two possible private market solutions for overcoming the problem of adverse selection in the...

briefly describe two possible private market solutions for overcoming the problem of adverse selection in the insurance market ? be sure to include any assumptions needed for such solutions to work .

This issue of adverse selection exists in health insurance market because there is asymmetric information between...

This issue of adverse selection exists in health insurance market because there is asymmetric information between insurers and individuals a) Explain what this "information asymmetry" means - i.e, which party (the insurer or the individual) has more information about what b) Explain why "information asymmetry" in health insurance market could lead to "death spiral" - i.e as more and more individuals drop out of the insurance market, the market might collapse in the end.

Are profitable ethical businesses profitable because they are ethical, or are they ethical because it can...

Are profitable ethical businesses profitable because they are ethical, or are they ethical because it can lead to profits? Consider companies such as Ben & Jerry’s, Body Shop, and Timberland in your answer.

The adverse selection problem as related to the insurance industry means that people who have insurance...

The adverse selection problem as related to the insurance industry means that people who have insurance are less likely to suffer losses than people who do not have insurance. True or false

Subjects