Multiple Choice
What is one reason car insurance seems much cheaper than health insurance?
A) Health insurance entails more idiosyncratic than systematic risk, and therefore the gains to diversification are more dramatic.
B) Car insurance entails more systematic than idiosyncratic risk, and therefore the gains to diversification are more dramatic.
C) Health insurance entails more systematic than idiosyncratic risk, and therefore there are fewer gains to diversification.
D) Health insurance is manipulated through market power, and car insurance is not.
Correct Answer:
Verified
Correct Answer:
Verified
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