Which of the Following Statements Concerning FAIR Plans Is (Are)true

question 18

Multiple Choice

Which of the following statements concerning FAIR plans is (are) true?
I.All property is eligible for coverage regardless of physical condition.
II.Losses and expenses are shared by insurers who participate in a plan.

• A)I only
• B)II only
• C)both I and II
• D)neither I nor II

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Definitions:

Economies of Scale

The economic benefits that businesses gain from their size of operations, where the expense per unit of production typically lowers as the scale increases.

Increasing Returns

A situation in which an increase in the scale of production results in a disproportionate increase in output, usually leading to lower average costs.

Suffer Losses

occurs when a business or individual incurs expenses that exceed their revenues.

Long-run

A period of time in economics during which all factors of production and costs are variable, allowing for full industry adjustment.