A Compulsory Government Insurance Program Can Avoid the Adverse Selection

question 1

Multiple Choice

A compulsory government insurance program can avoid the adverse selection problem, and it eliminates the moral hazard problem.

• A)True
• B)False
• C)Uncertain

---

Definitions:

Sales Mix

The combination of different products or services that a company sells, typically analyzed to understand their relative contributions to overall sales.

Operating Loss

A situation where a company's operating expenses exceed its gross profits, indicating a negative performance.

Fixed Costs

Expenses that do not change with the level of production or sales over a short period, such as rent, salaries, and insurance.

Book Value

The net value of an asset or company calculated as total assets minus intangible assets and liabilities.