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

question 35

Multiple Choice

The figures show two auto insurance markets, one market for safe drivers and one market for aggressive drivers.
-In a separating 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:

Head of Household

A tax filing status for unmarried individuals who pay more than half the cost of keeping up a home for themselves and a qualifying individual.

1040EZ

A simplified federal income tax form for individuals with straightforward financial situations, no longer in use as of the 2018 tax year.

Underpayment Penalty

A fine imposed by tax authorities on taxpayers who do not pay enough of their total estimated tax and withholding.

Estimated Payments

Periodic payments on expected taxes for the current year, typically paid quarterly by self-employed individuals and others with income not subject to withholding.