Insurance Companies Charge a Lower Premium to Drivers Who Carry

question 58

Multiple Choice

Insurance companies charge a lower premium to drivers who carry a higher deductible because

• A) insurance companies are not profit maximizers.
• B) a driver's riskiness decreases as the driver's deductible increases.
• C) a high deductible signals a high risk.
• D) insurance companies prefer that drivers carry no deductible.

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Definitions:

Genocide

The physical extermination of one people by another, either as a deliberate act or as the accidental outcome of activities carried out by one people with little regard for their impact on others.

Adjudication

The legal process by which an arbiter or judge reviews evidence and arguments to make a formal decision or judgement in a dispute.

Imprisonment

The act of confining someone in a prison or another facility as punishment for crimes or while awaiting trial.