Through years of experience, you have learned that a $2,000 milling machine suffers a catastrophic failure (it is a total loss) about once in 5 years. an insurance salesman offers to sell you coverage that will replace the machine. the annual premium for the coverage is $1,800. is this insurance a good deal?

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