In a particular insurance market,there is a decrease in the degree of risk aversion among suppliers.Holding everything else constant,the equilibrium premium will _____ and the equilibrium quantity of insurance will _____.
A)increase;increase
B)decrease;decrease
C)increase;decrease
D)decrease;increase

Question

Quizplus · Accepted Answer

When the degree of risk aversion decreases among suppliers, they will be willing to provide insurance at a lower premium. This will lead to a decrease in the equilibrium premium. At the same time, as the premium decreases, the quantity of insurance demanded by consumers will increase, leading to an increase in the equilibrium quantity of insurance. Therefore, the correct answer is D - decrease in premium and increase in quantity of insurance.

In a Particular Insurance Market,there Is a Decrease in the Degree