Which of the Following Is a Problem of Adverse Selection

question 90

Multiple Choice

Which of the following is a problem of adverse selection?

• A) The lender has a problem of distinguishing good risk from bad risk borrowers.
• B) The lender has a problem determining that the proceeds from a loan are being used as the borrower stated.
• C) A person takes up the hobby of bungee jumping after purchasing health insurance.
• D) Individuals use more medical services as a result of their purchase of a health insurance plan.

Recognize the relationship between energy efficiency, energy use, and GDP.

Gain insights into how electricity companies manage production costs amidst demand fluctuations.

Understand the role and viability of alternative energy sources in the context of depleting traditional fuels.

Comprehend the objectives of natural resource economics towards maximizing net benefits and minimizing externalities.

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Definitions:

WAN

Wide Area Network, a computer network that extends over a large geographical area, connecting multiple smaller networks such as local area networks (LANs).

POTS

Abbreviation for Plain Old Telephone Service, referring to the standard telephone service that has been the traditional form of residential and small business service connection to the telephone network.

Dial-Up

An internet connection technology that connects users to the internet through a standard telephone line at slow speeds.

DSL

Digital Subscriber Line, a family of technologies that provide internet access by transmitting digital data over the wires of a local telephone network.