In the Market for Insurance,the Adverse Selection Problem Arises Because

question 75

Multiple Choice

In the market for insurance,the adverse selection problem arises because

• A) fair odds are different for different people,and the insurance company cannot tell who is who.
• B) people tend to behave more recklessly when they are insured.
• C) some events simultaneously affect a large number of people.
• D) insurance companies must tilt the odds in their favor to cover their basic operating costs.

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Definitions:

Korean War

A conflict between North Korea, with the support of China and the Soviet Union, and South Korea, supported by the United Nations, primarily the United States, from 1950 to 1953, which ended in an armistice.

Long Telegram

A telegram by American diplomat George Kennan in 1946 outlining his views of the Soviet Union that eventually inspired the policy of containment.

Policy of Containment

A foreign policy strategy aimed at preventing the spread of communism, adopted by the United States during the Cold War.

Communist Victory

Refers to a successful achievement or takeover by communist forces or parties in a political or military struggle.