How does insurance reduce risk? What will be an ideal ...

[jhjkgdfhk]

How does insurance reduce risk?
 
  What will be an ideal response?

Question 2

As the number of firms in a market increases, the supply curve will shift to the left and the equilibrium price will rise.
 
  Indicate whether the statement is true or false

[abro1885]

Answer to Question 1

Insurance reduces the risk any individual faces because insurance pools risks. Everyone pays into the pool but only the small fraction of people who suffer a loss are paid from the pool. Essentially people reduce the risk of a large adverse financial outcome in exchange for the small, certain payment to the insurance company.

Answer to Question 2

FALSE