Question: Additional info provided below: (needed to answer above question) these are the potential options of diagrams/ - slopes Question 1 1 pts 9. For Q.8

 Additional info provided below: (needed to answer above question) these are

Additional info provided below: (needed to answer above question)

the potential options of diagrams/ - slopes Question 1 1 pts 9.

these are the potential options of diagrams/ - slopes

For Q.8 suppose that insurance is offered to both A and B

Question 1 1 pts 9. For Q.8 suppose that insurance is offered to both A and B at the same rate of $0.15 per $1 of coverage. If both A and B are risk neutral, (a) B will choose to not insure at all, A will insure fully. o (b) Both will insure fully at a cost of 0.15 $10,000. (c) Both will insure partially, but B will buy more coverage than A (d) A will choose to not insure at all, B will insure fully. 8. A is a good driver with a probability of 0.1 of having an accident and B is less careful and has an accident probability of 0.2. Each has a car initially valued at $10,000, and with a value of zero in the event of an accident. They each have no other wealth. They can each buy fair insurance of any positive amount up to $10,000. If cp is consumption (in $'s) in the "state" where an accident occurs, and co is consumption in the "state" where no accident occurs, then in a diagram with coon the horizontal axis and Cp on the vertical axis, (a) A's budget constraint has a slope of -0.9/0.1 and B's has slope -0.8/0.2 and both go through the point cb = 0, Cg = 10,000 (b) B's budget constraint has a slope of -0.2/0.8 and A's has slope -0.1/0.9 and both go through the point cb = 0, Cg = 10,000. (c) A's budget constraint has a slope of -0.9/0.2 and B's has slope -0.8/0.1 and both go through the point cb = 10,000, Cg = 0. (d) A's budget constraint has a slope of -0.8/0.1 and B's has slope is -0.9/0.2 and both go through the point cb = 10,000,0g = 0 Question 1 1 pts 9. For Q.8 suppose that insurance is offered to both A and B at the same rate of $0.15 per $1 of coverage. If both A and B are risk neutral, (a) B will choose to not insure at all, A will insure fully. o (b) Both will insure fully at a cost of 0.15 $10,000. (c) Both will insure partially, but B will buy more coverage than A (d) A will choose to not insure at all, B will insure fully. 8. A is a good driver with a probability of 0.1 of having an accident and B is less careful and has an accident probability of 0.2. Each has a car initially valued at $10,000, and with a value of zero in the event of an accident. They each have no other wealth. They can each buy fair insurance of any positive amount up to $10,000. If cp is consumption (in $'s) in the "state" where an accident occurs, and co is consumption in the "state" where no accident occurs, then in a diagram with coon the horizontal axis and Cp on the vertical axis, (a) A's budget constraint has a slope of -0.9/0.1 and B's has slope -0.8/0.2 and both go through the point cb = 0, Cg = 10,000 (b) B's budget constraint has a slope of -0.2/0.8 and A's has slope -0.1/0.9 and both go through the point cb = 0, Cg = 10,000. (c) A's budget constraint has a slope of -0.9/0.2 and B's has slope -0.8/0.1 and both go through the point cb = 10,000, Cg = 0. (d) A's budget constraint has a slope of -0.8/0.1 and B's has slope is -0.9/0.2 and both go through the point cb = 10,000,0g = 0

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