In the Market for Auto Insurance,in a Pooling Equilibrium

question 1

Multiple Choice

In the market for auto insurance,in a pooling equilibrium,

• A) risky and safe drivers pay the same premium for insurance.
• B) risky drivers pay a larger premium than do safe drivers for insurance.
• C) risky drivers pay a smaller premium than do safe drivers for insurance.
• D) risky drivers cannot obtain insurance.
• E) safe drivers cannot obtain insurance.

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Definitions:

Economic Decision Makers

Individuals or entities that make choices regarding the allocation of resources, investment, and production within an economy.

Economics

The social science concerned with the production, distribution, and consumption of goods and services.

Price Received

The amount of money a seller gets after the sale of a product or service, accounting for discounts, taxes, and additional charges.

Resources Used

The total inputs, including raw materials, labor, and capital, that are consumed in the production of goods and services.