Recall the Application About How Having Car Insurance Affects Driving

question 53

Multiple Choice

Recall the Application about how having car insurance affects driving behavior to answer the following
question(s) .
-Recall the Application. The idea that an insured driver, who bears less than the full cost of a collision, will drive less carefully than an uninsured driver is an example of

• A) asymmetric information.
• B) adverse selection.
• C) moral hazard.
• D) a thin market.

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Definitions:

Industry Profits

The total earnings generated by companies within a specific industry, after all costs and expenses are deducted.

Increasing-cost Industry

An industry in which the costs of production increase as the industry output increases, often due to the inputs' prices rising as demand for them grows.

Long-run Supply Curve

A graphical representation showing the quantities of goods that a producer is willing and able to supply over a period when all costs are variable.

Elastic Supply Curve

A concept in economics describing a supply curve where the quantity supplied changes significantly in response to a change in price.