Insurance Companies Try to Mitigate the Problem of Adverse Selection

question 112

Multiple Choice

Insurance companies try to mitigate the problem of adverse selection by:

• A)asking potential customers questions to gain as much information as possible about the person's risk characteristics.
• B)charging a higher premium to groups with characteristics that correlate with risky behavior.
• C)charging a higher price to all individuals to counter the lack of information.
• D)All of these are true.

---

Definitions:

Dr. Graham Welch

Dr. Graham Welch is a specific individual who may be known for his contributions or achievements in a particular field, requiring further context for a precise definition.

Saccule

A small sac-like cavity, especially one of two vestibular sacs within the ear that contributes to the sense of balance.

Endorphins

Chemical substances in the brain that act as natural painkillers and mood elevators, often released during exercise, excitement, pain, and when eating spicy food.

Gayatri Mantra

A highly revered and powerful mantra from Hinduism, chanted for enlightenment and the purification of the mind.