The Figures Show Two Auto Insurance Markets, One Market for Safe

question 40

Multiple Choice

The figures show two auto insurance markets, one market for safe drivers and one market for aggressive drivers.
-In a pooling equilibrium,aggressive drivers pay a premium of ________ and safe drivers pay a premium of ________.

• A) $1,000; $1,000
• B) $800; $1,200
• C) $1,200; $800
• D) $1,000; $800
• E) $1,200; $1,000

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Definitions:

Factory System

A method of manufacturing using machinery and division of labor, leading to mass production but also significant changes in society and the economy.

Machinery Use

Refers to the employment of machines to perform work or tasks, often used to increase efficiency, productivity, and precision in industries and agriculture.

Labor Organization

A group, often in the form of a union, that represents the collective interests of workers in negotiations with employers regarding wages, working conditions, and rights.

Mechanization

The process of changing from working largely or exclusively by hand or with animals to doing that work with machinery.