In which of the following cases is there an adverse selection problem? A motor insurance market, in which the insurers do not know how carefully the insured people drive A health insurance market, in which the insurers do not know whether or not the applicants for insurance are habitual smokers C Employees may take less care of office technology like laptops or even incentives like company cars because their employer will pay for them if dama A firm that employn home-workers, but cannot observe how hard they are working All the above are cases of moral hazard problem

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Question A12
In which of the folowing cases is there an adverse selection problem?
A motor insurance market, in which the insurers do not know how carefully the insured people drive
A health insurance market, in which the insurers do not know whether or not the applicants for insurance are habitual umokers
C
Employees may take less care of office technology like laptops or even incentives like company cars because their employer will pay for them if damaged
A firm that employs home-workers, but cannot observe how hard they are working
All the above are cases of moral hazard problem
Transcribed Image Text:Question A12 In which of the folowing cases is there an adverse selection problem? A motor insurance market, in which the insurers do not know how carefully the insured people drive A health insurance market, in which the insurers do not know whether or not the applicants for insurance are habitual umokers C Employees may take less care of office technology like laptops or even incentives like company cars because their employer will pay for them if damaged A firm that employs home-workers, but cannot observe how hard they are working All the above are cases of moral hazard problem
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