Insurance is valuable because a-most individuals are not rational. b-individuals do not know all possible states of the world. c-individuals experience diminishing marginal utility. d-individuals have imperfect information and about the probability of adverse events.

Insurance is valuable because a-most individuals are not rational. b-individuals do not know all possible states of the world. c-individuals experience diminishing marginal utility. d-individuals have imperfect information and about the probability of adverse events.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.4P

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Question

Insurance is valuable because

a-most individuals are not rational.

b-individuals do not know all possible states of the world.

c-individuals experience diminishing marginal utility.

d-individuals have imperfect information and about the probability of adverse events.

Definition Definition Satisfaction derived from the consumption of an additional unit of any commodity.

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