Which of the Following Is the Best Example of Adverse

question 10

Multiple Choice

Which of the following is the best example of adverse selection?

• A) Smokers are more likely to obtain health insurance.
• B) Safe drivers tend to get auto insurance.
• C) All drivers are required to have auto insurance if they are to register their cars legally in Connecticut.
• D) Both healthy and unhealthy people tend to buy life insurance.
• E) Given the existence of government-funded flood insurance, people continue to build homes in floodplains.

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Definitions:

Z Score

A statistical measurement that describes a value's relationship to the mean of a group of values, measured in terms of standard deviations.

Mean

The average of a set of numbers, calculated by adding all the numbers together and then dividing by the count of the numbers.

Inferential Statistics

Involves making predictions or inferences about a population based on a sample of data.

Probability

A measure of the likelihood that a particular event will occur, usually expressed as a number between 0 and 1.