Protectionism A) is the use of cheap labor to protect firms ...

[dalyningkenk]

Protectionism
 
  A) is the use of cheap labor to protect firms from paying high wages.
  B) refers to the use of copyright and trademark laws to protect inventors and artists from losing the rights to their creative efforts.
  C) is the use of trade barriers to protect domestic firms from foreign competition.
  D) refers to reductions in tariffs and other barriers that protect consumers from paying high prices.

Question 2

How do markets for insurance use no-claim bonuses to cope with private information?
 
  What will be an ideal response?

[amit]

Answer to Question 1

C

Answer to Question 2

No-claim bonuses are commonly used in auto insurance. One of the most important pieces of information a person can give an auto insurance company is his or her propensity to drive safely and avoid accidents. However, this information is only believable to the extent that driving records really do differentiate good drivers from bad drivers. Driving records cover only a short period of time and, randomly, some bad drivers will establish good records. So a good driving record is not a guarantee that the driver is a safe driver. The screening device that insurance companies use to overcome this potential problem is the no-claim bonuses that drivers accumulate when they do not make an insurance claim. Presumably, having not made a claim means that you were a good driver and did not need to make a claim

[dalyningkenk]

Excellent

[amcvicar]

Gracias!