Insurance companies charge annual premiums to collect revenue,which they then use to pay customers who file claims for damages they incur.As a result of the moral hazard problem (1) what is the percentage of policy holders making claims,and (2) what is the average premium charged when compared to a world with no moral hazard problem?
A) The percentage of policy holders making claims is higher;average annual premiums are lower.
B) The percentage of policy holders making claims is lower;average annual premiums are lower.
C) The percentage of policy holders making claims is higher;average annual premiums are higher.
D) The percentage of policy holders making claims is lower;average annual premiums are higher.
Correct Answer:
Verified
Q63: Which of the following is a characteristic
Q82: "Signaling" refers to actions by an informed
Q89: Which of the following events best exemplifies
Q93: When new professors are hired,their job performance
Q99: John goes to work 8 hours per
Q100: Carlos,who knows nothing about construction,paid Joe to
Q330: Adverse selection may lead to
A)owners of used
Q336: In corporations, which of the following are
Q356: The buyer runs a risk of being
Q360: Insurance companies charge annual premiums to collect
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents