What is moral hazard?
26) Health insurance leads to what types of moral hazards?
27) What are the main differences between adverse selection and moral hazard in the insurance market?
28) Why can car insurance companies charge higher auto rates for new customers than for established customers, all else held constant?
29) Suppose that everybody pays the same price for auto insurance. What should happen to the price of insurance if the law changes from a system where there is mandatory auto insurance to one where there is voluntary auto insurance?
Recall the Application about how having car insurance affects driving behavior to answer the following
30) Recall the Application. Explain the effect of mandatory car insurance laws on the number of traffic accidents and fatalities.
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