Travel insurance (which pays a traveler if the traveler needs to ...

[ENagel]

Travel insurance (which pays a traveler if the traveler needs to cancel his or her trip) has a clause that states it will not pay if the trip is cancelled because of a pre-existing condition.
 
  If sick people are more likely to purchase travel insurance, this clause is meant to A) reduce moral hazard.
  B) reduce adverse selection.
  C) increase moral hazard.
  D) increase adverse selection.

Question 2

Total utility is the benefit received from consuming an extra unit of a good.
 
  Indicate whether the statement is true or false

[dmurph1496]

Answer to Question 1

B

Answer to Question 2

FALSE