Elucidate why insurance companies often include deductibles

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Q. Average variable cost function (AVC) for Sting Rays - AVC(Q)=4.94+0.01Q+0.28Q². The algebraic signs of the three parameter estimates are positive since increasing in true parameters increase average total costs.

Q. Use your knowledge of the problems associated with asymmetric information to elucidate why insurance companies often include deductibles as part of their policies.

Reference no: EM1351357

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