Consider the market for insurance against car theft

Assignment Help Business Economics
Reference no: EM131009776

Consider the market for insurance against car theft. Some people are more likely than others to have their car stolen. Because insurance companies have less information about this risk than their customers do, the market for car theft insurance suffers from asymmetric information. The most efficient solution to this asymmetric information problem would be for insurance companies to:

A. Require all customers to disclose their place of residence

B. Increase the price of theft insurance for all customers

C. Insist that their customers install car alarms

D. Choose to insure only people who park in a guarded parking garage

Reference no: EM131009776

Questions Cloud

Effect of the gramm-leach-bliley act : What has been the likely effect of the Gramm-Leach-Bliley Act on financial? consolidation?
How does the emergence of interest-rate risk : How does the emergence of interest-rate risk help explain financial? innovation?
Example of how purely competitive firms operate : The New York Stock Exchange (NYSE) is cited as an example of how purely competitive firms operate. The Glass-Steagall Act is one example of how purely competitive firms may be regulated. What affect do you conclude strengthening of regulatory instrum..
About the dental insurance : While James was in college, he did not have dental insurance. James went to see a dentist once a year. After James graduated and started working, he bought dental insurance for himself. This insurance is a zero co-pay, no-deductible policy, so James ..
Consider the market for insurance against car theft : Consider the market for insurance against car theft. Some people are more likely than others to have their car stolen. Because insurance companies have less information about this risk than their customers do, the market for car theft insurance suffe..
Using the alarm system : The Cole family owns a house with an alarm system that they activate whenever they leave the house. Recently, the Cole family purchased homeowner's insurance that fully covers all losses. After purchasing the insurance, family members haven't been us..
Bridge design firm is performing an economic analysis : A bridge design firm is performing an economic analysis of two mutually exclusive designs for a highway overpass. The steel girder option has an initial cost of $2.24 million, and the concrete option has an initial cost of $2.52 million.  Based on th..
Roofing services suffers from asymmetric information : The market for roofing services suffers from asymmetric information because customers don't know the quality of roofers' work. Which of the following DOES NOT help overcome this information problem?
Health insurance is characterized by asymmetric information : The market for health insurance is characterized by asymmetric information because:

Reviews

Write a Review

Business Economics Questions & Answers

  Forecast savings mart sales of patio furniture each quarter

Savings Mart sells patio furniture. Sales are seasonal with higher sales in the spring and summer quarter and lower sales during the fall and winter quarters. Forecast Savings mart sales of patio furniture for each quarter of 2010

  Quantity of labor at diminishing marginal returns

Does the law of diminishing marginal returns apply to this firm's production process. If so, explain why and find the quantity of labor at which diminishing marginal returns.

  Expect the supply curve for steel beams

Suppose there is an increase in the price of steel. We would expect the supply curve for steel beams to:

  Determine if the proportions of individuals willing to pay

Conduct a goodness-of-fit test analysis to determine if the proportions of individuals willing to pay more for environmenlal.ly friendly products in the various age groups are equal.

  Slow-growth recovery due to a decline in investment

The U.S. economy fell into a recession in 2001 and then proceeded into a slow-growth recovery due to a decline in investment. A. Explain how a change in investment can have a big impact on GDP causing a national recession.

  Interest parity condition is expected to hold

Given the following data: Et = ¥125 = $1.00; Et+1 = ¥100 = $1.00; US interest rate = 20%. If the interest parity condition is expected to hold, interest rates in Japan should approximately equal (percentage)

  What price would your bond sell in the secondary market

The market interest rate increases to 10%. IN the afternoon at what price would your bond sell in the secondary market.

  Curve shifted-demand curve and supply curve

Indicate which curve shifted (demand curve, supply curve or both) and in which direction – for each of the following situations: *The price of furniture rises as the quantity bought and sold falls. *Apartment vacancy rates increase while average mont..

  What is the discounted present value of a prize

What is the discounted present value of a prize that gives you two installments of 1000 dollars (each), if these payments are made in five and six years from now, and the interest rate is 0.05?

  Greater productive efficiency than the china

The United States can make certain toys with greater productive efficiency than can the China. Yet we import those toys from China.

  Illustrate want the government to impose a price ceiling

Illustrate want the government to impose a price ceiling on pump gas.

  Illustrate what are the levels of income every worker

Illustrate what are the levels of income every worker and consumption per worker.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd