​Use the Following Setup for Question

question 45

Multiple Choice

​Use the following setup for question
Both Nadia and Samantha are applying to insure their car against theft.Nadia lives in a secure neighborhood,where the probability of theft is 10%.Samantha lives in a lesser secure neighborhood where the probability of theft is 25%.Both Nadia and Samantha own cars worth $10,000,and are willing to pay $100 over expected loss for insurance.
-​One of the solutions to the adverse selection problem in insurance is

• A)​Is to require that only the high risk individuals to buy insurance
• B)Is to require that only the low risk individuals buy insurance
• C)Is to require everyone to buy insurance
• D)​Is to completely ban insurance companies

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Definitions:

Spanish

A Romance language originating from the Iberian Peninsula of Europe, widely spoken in Spain, Latin America, and parts of the United States.

French Vocabulary

A set of words in the French language that allows for communication, understanding, and expression in various contexts.

Repression

An unconscious process that keeps disturbing or threatening thoughts from becoming conscious.

Recovered Memories

A phenomenon where memories of past events, often traumatic, are recalled after being forgotten or repressed.