(27 Points)
You just bought your first new (used) car for $15,000. The car is out of factory warranty but the salesmen can offer you an extended warranty that is 5 years, 50,000 miles and covers the same items as a factory warranty for $2,000. Will you purchase it? Why or why not?

With signals from no-claim bonuses and deductibles, a. the marginal cost curve for careful drivers lies to the left of the marginal cost curve for aggressive drivers b. auto insurance companies insure more aggressive drivers than careful drivers because aggressive drivers have a greater need for the insurance c. the market for car insurance has a separating equilibrium, and the market is efficient d. most drivers pay higher premiums than if the market had no signals