Lucy decides to buy car insurance.She is doing this because:
A)she wishes to increase her exposure to risk.
B)she wants to decrease her exposure to risk.
C)she is not risk-averse.
D)her marginal utility is not very dependent upon her income.

Question

Quizplus · Accepted Answer

Lucy is purchasing car insurance because she wants to decrease her exposure to risk. Car insurance provides financial protection in case of accidents or other events that could result in costly damages. By purchasing car insurance, Lucy is transferring the risk to the insurance company, which reduces her own risk exposure.

Lucy Decides to Buy Car Insurance