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For each of the following kinds of insurance, give an example of behavior that can be called moral hazard and another example of behavior that can be called adverse selection . a. health insurance b. car insurance
Principles of Macroeconomics (Mind...
Principles of Macroeconomics (Mind...
For each of the following kinds of insurance, give an example of behavior that can be called moral hazard and another example of behavior that can be called adverse selection.
- a. health insurance
- b. car insurance
Subpart (a):
Example of moral hazards and adverse selections
Explanation of Solution
Heath insurance: In the case of health insurance, an unhealthy person applying for a health insurance policy is an example of adverse selection because here the possibility...
Subpart (b):
Examples of moral hazards and adverse selection.
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