When Sardar buys insurance, on net he
A) gains if the value of the insurance is greater than the price he pays the insurance company.
B) loses because the price must pay the insurance company lowers his expected utility.
C) gains because his actual wealth with the insurance is greater than his expected wealth without the insurance.
D) loses if the price of the insurance equals his expected loss from a bad outcome.
Correct Answer:
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A) creates moral hazard but eliminates
A) in
