Question

Provide a 2-3 sentence response to each of these claims, indicating whether the statement is true or false, or if the statement is ambiguous, state what would need to be altered to the statement to make it clearly true or false –

a) True/False/Uncertain: The existence of moral hazard is perhaps the most compelling justification for public intervention in insurance markets.

b) True/False/Uncertain: Risk-averse consumers optimally choose to fully insure.

Answer 1