When the Monopoly Insurer Cannot Observe the Care Taken by the Insured

question 15

Multiple Choice

When the monopoly insurer cannot observe the care taken by the insured party to avoid an accident,the most profitable contract for it:

• A)offers full insurance at a higher price than the full-information policy.
• B)offers full insurance at a lower price than the full-information policy.
• C)offers partial insurance at a higher price than the full-information policy.
• D)offers partial insurance at a lower price than the full-information policy.

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Definitions:

Obedience To Authority

The action of following orders or directions from those in positions of power, even if it goes against one's own beliefs or morals.

450-Volt Shock

A specific high-voltage shock often referenced in psychological studies on obedience, such as the Milgram experiment.

Diverse Sample

A group of individuals selected for research or study, which represents a wide range of backgrounds, characteristics, or experiences.

Fully Obedient

Fully compliant or readily following instructions, commands, or orders without question.