Which of the Following Actions Best Illustrates Adverse Selection

question 34

Multiple Choice

Which of the following actions best illustrates adverse selection?

• A)After Nalah purchases insurance, she has less incentive to be careful.
• B)James knows he is a reckless driver and so he applies for automobile insurance.
• C)Xavier dislikes losing $400 more than he likes winning $400.
• D)A person is unwilling to buy a stock when she believes its price has an equal change of rising or falling $10.

---

Definitions:

Spyware Infections

Refers to malicious software installed on a computer or device without the user's knowledge, aimed at gathering personal or sensitive information.

Sampling Frame

A list or database from which a statistical sample is drawn for a study or survey.

Population

The whole number of people or inhabitants in a country or region, or a particular group of people or objects being studied.

Fiber-optic

Relating to or using thin flexible fibers of glass or other transparent solids to transmit light signals for telecommunications or computing.