1. One way of screening in the automobile insurance market is for companies to A. offer policies with different deductibles and different premiums. B. eliminate policies with no-claim bonuses because these policies are usually not profitable. C. insure only careful drivers. D. insure only risky drivers. E. offer warranties. 2. In the used car market with warranties, the equilibrium is a and the lemons problem is A. pooling equilibrium; solved B. separating equilibrium; solved C. pooling equilibrium; unresolved D. separating equilibrium; unresolved E. pooling quilibrium; possibly solved and possibly unresolved, depending on whether good used cars sell for a higher price than do lomons
1. One way of screening in the automobile insurance market is for companies to A. offer policies with different deductibles and different premiums. B. eliminate policies with no-claim bonuses because these policies are usually not profitable. C. insure only careful drivers. D. insure only risky drivers. E. offer warranties. 2. In the used car market with warranties, the equilibrium is a and the lemons problem is A. pooling equilibrium; solved B. separating equilibrium; solved C. pooling equilibrium; unresolved D. separating equilibrium; unresolved E. pooling quilibrium; possibly solved and possibly unresolved, depending on whether good used cars sell for a higher price than do lomons
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please provide answer of both questions please in 1 hr please it's request
Transcribed Image Text:1. One way of screening in the automobile
insurance market is for companies to
A. offer policies with different deductibles
and different premiums.
B. eliminate policies with no-claim bonuses
because these policies are usually not
profitable.
C. insure only careful drivers.
D. insure only risky drivers.
E. offer warranties.
2. In the used car market with warranties,
the equilibrium is a
and the
lemons problem is
A. pooling equilibrium; solved
B. separating equilibrium; solved
C. pooling equilibrium; unresolved
D. separating equilibrium; unresolved
E. pooling equilibrium; possibly solved and
possibly unresolved, depending on whether
good used cars sell for a higher price than
do lemons
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