When State Regulators Require Consumers to Purchase and Use a Safety

question 83

Multiple Choice

When state regulators require consumers to purchase and use a safety device,the regulation

• A)always reduces total economic surplus.
• B)has an ambiguous effect on total economic surplus,depending on whether the regulation infringes on personal liberty.
• C)does not reduce total economic surplus if the marginal cost of providing the last device purchased is equal to the marginal social benefit of that device.
• D)increases total economic surplus if the government subsidizes the purchase.

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Definitions:

Policyholder

An individual or entity that owns an insurance policy and is entitled to coverage under that policy.

Claim Covered

A statement acknowledging that an insurance policy or warranty agreement will provide financial protection or reimbursement for a specific loss or damage.

Professional Indemnity Insurance

A type of liability insurance that protects professionals and businesses against claims made by clients for errors, omissions, or negligence in services provided.

Malpractice

Professional misconduct or failure to meet the acceptable standards of practice in any professional or official position, often leading to harm or injury.