Answer Happy

20. (2 points) The graph below shows a consumer's tradeoff between safety-related effort and their expected loss before and after safety-cap regulations. ELo is the actual ex- pected loss before the regulation, EL, is the actual expected loss after the regulation, and EL2 is the consumer's perceived expected loss after the regulation. Expected Loss ELO EL B EL2 0 Safety Effort If the consumer selects point A before safety cap regulation, what can we say about the consumer's safety outcome after the regulation? I If the consumer maintains the same safety effort, then they will actually move to point C. II If the consumer believes they are at point D, then the actual expected loss is higher after the regulation. A. Only I B. Only II C. I and II D. Neither I nor II