Evaluate the following statements.
(a) Offering health insurance by employers as a fringe-benefit reduces the problem of adverse selection.
(b) Too little insurance means that people bear a lot of risk, too much insurance means that people will take inadequate care!
(c) A limited warranty is a signal that the product is not a "lemon." Sears offers satisfaction guaranteed or your money back on its Craftsman tools. Discuss the pros and cons of this unconditional warranty.
(d) High switching costs locks-in consumers from buying substitute goods that may be cheaper.