Question: Statistically teenage drivers are more likely to have an automobile
Statistically, teenage drivers are more likely to have an automobile accident than adult drivers. As a result, insurance companies charge higher insurance premiums for teenager drivers. Suppose one insurance company decided to charge teenagers and adults the same premium based on the average risk of an accident for all drivers. Using your knowledge of the problems associated with asymmetric information explain whether you think this insurance company will be profitable.
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