The option that correctly explains the reason for arising of moral hazard in an insurance market.

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Answer 1

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Chapter 12, Problem 5MCQ

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To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

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1. Indicate which of the following describes a moral hazard problem and which describes adverse selection: a. A person with a terminal illness buys several life insurance policies via the internet. b. A person rides carelessly because he has motorcycle insurance. c. A person who intends to burn down his house takes out a large fire insurance policy. d. A woman who anticipates having a large family takes a job with a firm that offers exceptional childcare benefits.

Which is the best example of health care insurance in the sense of socializing risk? a. A dental insurance policy that pays for two check-ups a year but nothing else.b. A comprehensive health care policy that essentially pays for everything including check ups but is very expensivec. A health care policy that is relatively inexpensive but only pays for medical expenses after a $2,000 annual deductible is met. After $2,000 the policy pays 100 percent for everything.

Answer 2

Question

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

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Answer 3

Question

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

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Answer 4

Question

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

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Answer 5

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

Answer 6

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

Answer 7

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

Answer 8

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Answer 11

Ch. 12 - Prob. 1SPPA Ch. 12 - Prob. 2SPPA Ch. 12 - Prob. 3SPPA Ch. 12 - Prob. 4SPPA Ch. 12 - Prob. 5SPPA Ch. 12 - Prob. 6SPPA Ch. 12 - Prob. 7SPPA Ch. 12 - Prob. 8SPPA Ch. 12 - Prob. 9SPPA Ch. 12 - Prob. 10SPPA

The option that correctly explains the reason for arising of moral hazard in an insurance market.

Solution Summary: The author explains that moral hazard arises when one party gets worried in a risky event knowing that it is far covered towards the danger and the other party will incur the value.

Concept explainers

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

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Chapter 12 Solutions

The option that correctly explains the reason for arising of moral hazard in an insurance market.

Solution Summary: The author explains that moral hazard arises when one party gets worried in a risky event knowing that it is far covered towards the danger and the other party will incur the value.

Concept explainers

To identify: The option that correctly explains the reason for arising of moral hazard in an insurance market.

Want to see the full answer?

Chapter 12 Solutions

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.