Suppose that the insurer cannot observe whether the insured exerts the costly loss prevention effort (i.e., there is a moral hazard problem of the insured). Which of the following statements is correct? Question 4Select one: a. After buying an insurance policy, the insured would not exert the loss prevention effort regardless of the level of coverage. b. If the premium is set sufficiently high, the insured would exert the effort even after buying a full coverage insurance. c. To induce the insured to exert the effort, the insurer must offer a full coverage insurance. d. Moral hazard problems can reduce the profitability of insurance firms as well as the welfare of policyholders