The option that correctly explains the reason for arising of moral hazard in an insurance market.

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Answer 1

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Chapter 12, Problem 5MCQ

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To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

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___ occurs when insurance companies structure plans that provide an incentive for healthier consumers to enroll while discouraging enrollment of higher-risk individuals a. Guaranteed renewability b. Cherry-picking c. Moral Hazard d. Asymmetric Information e. Adverse Selection

Because of the moral hazard problem, a-the government has increased incentive to regulate insurance markets. b-low-risk individuals do not choose insurance. c-the costs of providing insurance decreases. d-full insurance may no longer be efficient.

1)Describe an example of moral hazard that we may run into in the real world. Think of something that is legal and not inherently lethal, yet still demonstrates elevated risk for the participant who would likely act safer if insurance or protection was not available. Explain why someone might take this risky action. What are the benefits to the risky behavior? In your response to two of your peers, explain what an insurance company may do to reduce the likelihood that an individual would take this risk. Keep in mind, that we cannot always just deny coverage if an individual is participating in the risky behavior.

Answer 2

Question

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

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Answer 3

Question

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

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Answer 4

Question

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

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Answer 5

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

Answer 6

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

Answer 7

Chapter 12, Problem 5MCQ

To determine

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

Answer 8

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Answer 9

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Answer 11

Ch. 12 - Prob. 1SPPA Ch. 12 - Prob. 2SPPA Ch. 12 - Prob. 3SPPA Ch. 12 - Prob. 4SPPA Ch. 12 - Prob. 5SPPA Ch. 12 - Prob. 6SPPA Ch. 12 - Prob. 7SPPA Ch. 12 - Prob. 8SPPA Ch. 12 - Prob. 9SPPA Ch. 12 - Prob. 10SPPA

The option that correctly explains the reason for arising of moral hazard in an insurance market.

Solution Summary: The author explains that moral hazard arises when one party gets worried in a risky event knowing that it is far covered towards the danger and the other party will incur the value.

Concept explainers

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.

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Chapter 12 Solutions

The option that correctly explains the reason for arising of moral hazard in an insurance market.

Solution Summary: The author explains that moral hazard arises when one party gets worried in a risky event knowing that it is far covered towards the danger and the other party will incur the value.

Concept explainers

To identify: The option that correctly explains the reason for arising of moral hazard in an insurance market.

Want to see the full answer?

Chapter 12 Solutions

To identify:

The option that correctly explains the reason for arising of moral hazard in an insurance market.