An Insurance Contract Is NOT Considered to Be an Illegal

question 40

Multiple Choice

An insurance contract is NOT considered to be an illegal form of "wagering" because

• A)one must have an insurable interest in the person being insured.
• B)insurance contracts are underwritten by reputable companies.
• C)insurance activities are regulated by the state department of insurance.
• D)the money being paid out comes from premiums collected over time.

---

Definitions:

Natural Monopoly

A market situation where due to high fixed costs or barriers to entry, it is most efficient for production to be concentrated in a single firm.

Economies Of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Monopolist

A solo seller in a market who has significant control over the pricing and availability of a unique product or service.

Profit-Maximizes

The method or approach of modifying production and pricing to secure the maximum achievable profit.