Which of the Following Statements About Buying Homeowners Insurance Is

question 15

Multiple Choice

Which of the following statements about buying homeowners insurance is true?

• A)There is no reason to carry insurance for more than 80 percent of a dwelling's replacement cost.
• B)The deduction for depreciation will be increased if a personal property replacement cost endorsement is purchased.
• C)Premiums often can be reduced substantially by selecting a higher deductible.
• D)There is little reason to compare cost since the lack of competition results in little price variation among companies.

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Definitions:

Large-Scale Business

An enterprise or organization that operates on a significant scale, typically involving extensive operations, large numbers of employees, or substantial revenue.

Diseconomies of Scale

The phenomenon where production costs increase as a firm or industry grows, leading to reduced efficiency and higher per-unit costs.

Law of Diminishing Returns

The principle that adding more of one factor of production, while keeping others constant, will eventually yield lower per-unit returns.

Economic Profit

The surplus remaining after deducting both explicit and implicit costs from total revenues, emphasizing a firm's financial performance beyond just its accounting profit.