Answer Happy

1)
Which of the following explains "market failure" (or
non-viability or the "death spiral") of some insurance markets?
diminishing marginal utility or benefit.
adverse selection.
reduced levels of "self-insurance."
moral hazard.
consumption-smoothing.
2)
The desire for "consumption- smoothing" is based on the economic
principle of
supply and demand
diminishing marginal returns
the efficiency of perfectly competitive markets.
diminishing marginal utility (or marginal benefit)
asymmetric information.
3)
The basic reason why individuals want insurance is that they are
assumed to be risk-averse and assumed to want to
overcome the information asymmetries that are barriers to an
insurance transaction.
remove the information-theoretic problem of moral hazard.
minimize the amount of adverse selection.
maximize their "expected utility" in the statistical sense of
the phrase.
maximize the utility of the expected monetary outcome in an
uncertain world.