Risk probability on the vertical axis

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Reference no: EM13898666

On a graph that has risk probability on the vertical axis and fullness of insurance on the horizontal access (on the origin, person is uninsured. As one moves gradually to the right, insurance starts becoming available from small benefits, to better and better benefits. The endpoint of the horizontal axis is full coverage insurance where insured does not have any out of pocket costs).

The "probability of risk lines" slope up, What observations can we make from this graph?

a. Here, insurance does not create a moral hazard.

b. Here insurance creates a moral hazard

c. moral hazard increases the probability of the risk

d. b and c

Reference no: EM13898666

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