Louisa is an avid cyclist who is currently working on her business degree. She normally rides a bike worth $1200 to class. If Louisa locks her bike carefullylocks both wheelsthe chance of theft for the term is 10%, but this careful locking procedure is time consuming. If she is less carefuljust quickly locks the frame to a bike rackthe chance of theft is 20%. Louisa is risk averse and is considering buying theft insurance for her bike. There are two types of insurance. With full insurance, Louisa pays the premium and gets the fullI $1.200 value of the bike if it is stolen. Alternatively. with partial insurance, Louisa receives only 90% of the bike's value. $1030. if the bike is stolen. Which contract is more likely to induce moral hazard problems? Moral hazard problems are more likely to result from [:1 A. full insurance because it is likely more expensive than partial insurance. [:1 B. full insurance because insurance companies know more about how likely bike theft is than Louisa. [:1 C. full insurance because Louisa bears less of the consequences of her actions than with partial insurance. [:1 D. partial insurance because Louisa knows more about how careful she will be than the insurance company. [:1 E. partial insurance because Louisa is more risk averse than the insurance company. To break even on consumers like Louisa, what price would the riskneutral insurance company have to charge for full insurance? To break even. the insurance company will have to charge a price of $ for full insurance. (Enter your response as a whole number.) If we observe Louisa buying partial insurance, what can we say about the tradeoff between moral hazard and efcient riskbearing? If Louisa buys partial insurance, then (relative to full insurance) Louisa will take Y safety precautions and will bear Y risk