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Risk Pooling:lowers the Overall Cost of a Catastrophe

question 41

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Risk pooling:lowers the overall cost of a catastrophe.reduces the likelihood of a catastrophic event.reduces the impact of a catastrophe on each individual in the risk pool.


Definitions:

Marginal Costs

The additional cost incurred by producing one additional unit of a product or service.

Variable Costs

Costs that vary directly with the level of production, such as materials and labor, in contrast to fixed costs which remain constant regardless of production level.

Homogeneous Products

Goods that are identical in quality and features, making them interchangeable in the eyes of consumers.

Indistinguishable

Incapable of being identified as different or distinct, often used in contexts where two or more items appear exactly alike.

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