(a) To state: The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

Question

Place an “M” beside the items in the following list that describe a moral hazard problem and an “A” beside those that describe an adverse selection problem a. A person with a terminal illness buys several life insurance policies through the mail. b. A person drives carelessly because she has automobile insurance. c. A person who intends to torch his warehouse takes out a large fire insurance policy. d. A professional athlete who has a guaranteed contract fails to stay in shape during the off season. e. A woman who anticipates having a large family takes a job with a firm that offers exceptional child care benefits.

Answer 1

Question

Chapter 8, Problem 10P

To determine

(a)

To state:

The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

To determine

(b)

To state:

The reason for if a car insurance excluding the insurance of car for commercial use can reduce moral hazards.

To determine

(c)

To state:

The reason behind insurance of a vehicle based on the driving distance helps reduce moral hazards.

To determine

(d)

To state:

The reason behind a vehicle using GPS monitor recording the location and speed can help reduce the hazard problem.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

Place an “M” beside the items in the following list that describe a moral hazard problem and an “A” beside those that describe an adverse selection problem a. A person with a terminal illness buys several life insurance policies through the mail. b. A person drives carelessly because she has automobile insurance. c. A person who intends to torch his warehouse takes out a large fire insurance policy. d. A professional athlete who has a guaranteed contract fails to stay in shape during the off season. e. A woman who anticipates having a large family takes a job with a firm that offers exceptional child care benefits.

This is a Microeconomics problem. (a) What is adverse selection in the context of a market with asymmetric information? (b) Explain how adverse selection can cause undesirable outcomes in a health insurance industry over time.

1. When an auto insurance company is screening, it is A. attempting to keep its private information private. B. marketing its policies to customers. C. ignoring the possibility of moral hazard in order to minimize adverse selection. D. trying to determine if a driver is an aggressive driver or a safe driver. E. making its private information public. 2. In the market for health care services, Health Maintenance Organizations A. help overcome adverse selection by enrolling only healthy clients. B. exist to insure people with preexisting medical conditions. C. overprovide medical care and thereby result in increased costs. D. help overcome moral hazard by monitoring the quality of the service. E. None of the above answers are correct 3. Moral hazard in the market for healthcare services leads Question content area bottom Part 1 A. to providers over treating patients.. B. to healthy people not buying health insurance. C. patients to adopt healthy life styles. D. to all…

Answer 2

Question

Chapter 8, Problem 10P

To determine

(a)

To state:

The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

To determine

(b)

To state:

The reason for if a car insurance excluding the insurance of car for commercial use can reduce moral hazards.

To determine

(c)

To state:

The reason behind insurance of a vehicle based on the driving distance helps reduce moral hazards.

To determine

(d)

To state:

The reason behind a vehicle using GPS monitor recording the location and speed can help reduce the hazard problem.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 3

Question

Chapter 8, Problem 10P

To determine

(a)

To state:

The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

To determine

(b)

To state:

The reason for if a car insurance excluding the insurance of car for commercial use can reduce moral hazards.

To determine

(c)

To state:

The reason behind insurance of a vehicle based on the driving distance helps reduce moral hazards.

To determine

(d)

To state:

The reason behind a vehicle using GPS monitor recording the location and speed can help reduce the hazard problem.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 4

Question

Chapter 8, Problem 10P

To determine

(a)

To state:

The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

To determine

(b)

To state:

The reason for if a car insurance excluding the insurance of car for commercial use can reduce moral hazards.

To determine

(c)

To state:

The reason behind insurance of a vehicle based on the driving distance helps reduce moral hazards.

To determine

(d)

To state:

The reason behind a vehicle using GPS monitor recording the location and speed can help reduce the hazard problem.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 5

Chapter 8, Problem 10P

To determine

(a)

To state:

The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

To determine

(b)

To state:

The reason for if a car insurance excluding the insurance of car for commercial use can reduce moral hazards.

To determine

(c)

To state:

The reason behind insurance of a vehicle based on the driving distance helps reduce moral hazards.

To determine

(d)

To state:

The reason behind a vehicle using GPS monitor recording the location and speed can help reduce the hazard problem.

Answer 6

Chapter 8, Problem 10P

To determine

(a)

To state:

The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

Answer 7

Chapter 8, Problem 10P

To determine

(a)

To state:

The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

Answer 8

To determine

(b)

To state:

The reason for if a car insurance excluding the insurance of car for commercial use can reduce moral hazards.

Answer 9

To determine

(b)

To state:

The reason for if a car insurance excluding the insurance of car for commercial use can reduce moral hazards.

Answer 10

To determine

(c)

To state:

The reason behind insurance of a vehicle based on the driving distance helps reduce moral hazards.

Answer 11

To determine

(c)

To state:

The reason behind insurance of a vehicle based on the driving distance helps reduce moral hazards.

Answer 12

To determine

(d)

To state:

The reason behind a vehicle using GPS monitor recording the location and speed can help reduce the hazard problem.

Answer 13

To determine

(d)

To state:

The reason behind a vehicle using GPS monitor recording the location and speed can help reduce the hazard problem.

Answer 14

Expert Solution & Answer

Answer 15

Expert Solution & Answer

Answer 16

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 17

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 18

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 19

Trending nowThis is a popular solution!

Answer 20

Trending nowThis is a popular solution!

Answer 21

Trending nowThis is a popular solution!

Answer 22

Trending now

Answer 23

This is a popular solution!

Answer 24

See solution

Check out sample textbook solution

Answer 25

Ch. 8 - Prob. 1P Ch. 8 - Draw a standard supply and demand diagram for...Ch. 8 - Prob. 3P Ch. 8 - Prob. 4P Ch. 8 - Prob. 5P Ch. 8 - Prob. 6P Ch. 8 - Prob. 7P Ch. 8 - Prob. 8P Ch. 8 - Prob. 9P Ch. 8 - Prob. 10P

(a) To state: The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

Solution Summary: The author explains that an insurer can know about the seriousness of moral hazard if the policyholder is willing to pay a large deductible.

Concept explainers

(a)

To state:

The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

(b)

To state:

The reason for if a car insurance excluding the insurance of car for commercial use can reduce moral hazards.

(c)

To state:

The reason behind insurance of a vehicle based on the driving distance helps reduce moral hazards.

(d)

To state:

The reason behind a vehicle using GPS monitor recording the location and speed can help reduce the hazard problem.

Chapter 8 Solutions

(a) To state: The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

Solution Summary: The author explains that an insurer can know about the seriousness of moral hazard if the policyholder is willing to pay a large deductible.

Concept explainers

(a) To state: The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

(b) To state: The reason for if a car insurance excluding the insurance of car for commercial use can reduce moral hazards.

(c) To state: The reason behind insurance of a vehicle based on the driving distance helps reduce moral hazards.

(d) To state: The reason behind a vehicle using GPS monitor recording the location and speed can help reduce the hazard problem.

Chapter 8 Solutions

(a)

To state:

The reason an insurer can know something valuable about the seriousness of the moral hazard problem if the policyholder is willing to pay a large deductible amount on policy.

(b)

To state:

The reason for if a car insurance excluding the insurance of car for commercial use can reduce moral hazards.

(c)

To state:

The reason behind insurance of a vehicle based on the driving distance helps reduce moral hazards.

(d)

To state:

The reason behind a vehicle using GPS monitor recording the location and speed can help reduce the hazard problem.