Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 12, Problem 4IAPA
To determine
To provide:
An example of private information possessed by a hockey player who wants a no-trade clause. Whether a hockey player who is in a long-term contract with no trade clause can cause moral hazard and problem of adverse selection to the team.
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24. Consider adverse selection in the car insurance market. Drivers are either risky or safe. The insurance
companies cannot distinguish between the two types of drivers, but they know that 50% of all drivers are
risky. Insuring a risky driver costs $3,000, while insuring a safe driver costs $1,000. The benefits of
insurance is $4,000 for a risky driver and $1,500 for a safe driver. If insurers cannot observe the type of
buyer they are insuring, what is the minimum equilibrium price of insurance?
a. $1,000
b. $1,500
c. $2,000
d. $3,000
e. $4,000
Robert decides to start working for the local ridesharing company. He has a large 12-passenger van and thinks he will be in big demand at the airport. He tells his personal car insurance company that he is driving for a ridesharing company, and he needs some additional insurance. He is denied additional coverage. Why?
There is no such thing as ridesharing insurance.
He lives in a state that doesn’t offer ridesharing insurance.
The city he lives in is too small for him to qualify for ridesharing insurance.
Many insurance companies will not insure high-occupancy vehicles under their ridesharing policies.
Please give typed solution, don't use handwriting or notebook for solution.
Todd is driving his SUV and Susan is a passenger. They are headingdowntown for dinner. Todd’s PAP policy has a Medical Payment limit of$10,000 per person. Susan’s PAP has a Medical Payment limit of $5,000 person.
Todd is involved in an at-fault accident that results in Susan beinginjured and incurring $12,000 of medical expenses.
How much in Medical Payments coverage would Todd’s PAP insurerpay?
How much in Medical Payments coverage would Susan’s PAP insurerpay?
Chapter 12 Solutions
Foundations of Economics (8th Edition)
Ch. 12 - Prob. 1SPPACh. 12 - Prob. 2SPPACh. 12 - Prob. 3SPPACh. 12 - Prob. 4SPPACh. 12 - Prob. 5SPPACh. 12 - Prob. 6SPPACh. 12 - Prob. 7SPPACh. 12 - Prob. 8SPPACh. 12 - Prob. 9SPPACh. 12 - Prob. 10SPPA
Ch. 12 - Prob. 11SPPACh. 12 - Prob. 1IAPACh. 12 - Prob. 2IAPACh. 12 - Prob. 3IAPACh. 12 - Prob. 4IAPACh. 12 - Prob. 5IAPACh. 12 - Prob. 6IAPACh. 12 - Prob. 7IAPACh. 12 - Prob. 8IAPACh. 12 - Prob. 9IAPACh. 12 - Prob. 1MCQCh. 12 - Prob. 2MCQCh. 12 - Prob. 3MCQCh. 12 - Prob. 4MCQCh. 12 - Prob. 5MCQCh. 12 - Prob. 6MCQCh. 12 - Prob. 7MCQ
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