Which of the Following Is True If the Insurance Market

question 195

Multiple Choice

Which of the following is true if the insurance market is efficient?

• A)The deductibles eliminate moral hazard.
• B)Society as a whole engages in less risky behavior.
• C)It transfers risk from those who most want to get rid of it to those least bothered by the risk.
• D)Premiums are always kept to the level of a fair insurance policy.

---

Definitions:

McNemar

A statistical test used to determine if there are differences on a dichotomous dependent variable between two related groups.

Fisher's Exact

A statistical significance test used in the analysis of contingency tables where sample sizes are small.

Expected Frequency

The number of occurrences predicted in a category of a contingency table based on probabilistic models.

Political Preference

An individual's inclination or bias toward one or more political parties, ideologies, or policy positions.