The Following Is an Example of Adverse Selection​

question 31

Multiple Choice

The following is an example of adverse selection​

• A)​A majority of those applying for well paid jobs are well qualified
• B)More reckless drivers opt for cars with more safety devices
• C)Individuals living in less secure neighborhoods want to buy less insurance
• D)​Individuals with a strong family history of heart diseases opt to buy less insurance

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Definitions:

Economies of Scale

Cost benefits that organizations acquire by scaling up their operations, wherein the cost for each unit produced tends to fall as the scale of operation enlarges.

Min Per-unit Costs

The lowest possible cost of producing one unit of good or service, achieved through efficient use of resources and optimal production scale.

Employee Shirking

Refers to employees putting in less effort than agreed upon or expected, often when they believe their lack of effort will not be noticed or punished.

Specialization

The process of focusing on and becoming expert in a particular area of production or knowledge to increase efficiency.