Which of the Following Is a Description of Adverse Selection

question 158

Multiple Choice

Which of the following is a description of adverse selection?

• A) Malpractice insurance may increase the amount of malpractice.
• B) Drivers may be less cautious because they have airbags installed in a car.
• C) Those individuals who most need insurance are the ones most likely to buy it.
• D) A work contract that gives a set number of sick days may encourage workers to claim they are sick more often.
• E) A polluting firm is taxed by the government.

---

Definitions:

Deficiency

The state of lacking a necessary quality or element, leading to inadequacy or incompleteness.

Decision Complexity

The level of difficulty and the number of factors and variables that must be considered when making a decision.

Government Regulation

The act of governing bodies setting and enforcing rules and standards on industries, businesses, and individuals to protect public interest.

Decision Complexity

The level of difficulty in making a choice, often due to the number of variables, potential outcomes, or implications involved.