mpany of 5000. Safe drivers have a lower probability of accidents with óf $: áfé dřivers have a lower prob pected loss to the insurance company of $1000. Insurer cannot distingui ween reckless and safe drivers but know that reckless drivers make up oportion of all drivers. What single premium should the risk-neutral insu arge? Assume that the insurance market is perfectly competitive. Is the entioned problem an example of Adverse Selection or Moral Hazard? E>

Insurance buyers have more information about whether they are high-risk or low-risk than the insurance company does. This creates an asymmetric information problem for the insurance company because buyers who are high-risk tend to want to buy more insurance, without letting the insurance company know about their higher risk. How might this problem impact an insurance company? F T O The company will not be impacted. O The insurance buyers, not the company, will be impacted. As high risk buyers submit claims, they will use up the company's funds for that year, and since the company did not adjust for these high risk claims, once that money is used up, remaining claimants won't receive any coverage. The company will be faced with heavy losses. The insurance company may decide not to sell insurance in this market at all or otherwise choose not to sell insurance to those they can identify as high risk. 106 # C 4 $ JUL 21 tv♫♬ % MacBook Pro Search or type URL + W D P N Ⓒ

please teach  explain step by step,

When dealers provide warranties in a used-car market A. the outcome is inefficient B. the outcome is a separating equilibrium C. buyers don't always believe the signal because the cost of sending a false signal is low D. the outcome is a pooling equilibrium.