​You Offer an Extended Warranty for Your Product That Is

question 48

Multiple Choice

​You offer an extended warranty for your product that is purchased by a few customers.If the product typically fails 2% of the time,the claim rate will exceed 2% of warranty purchasers because

• A)​adverse selection will lead those who are more reckless to purchase the warranty
• B)moral hazard will lead those who purchase to be more reckless
• C)you systematically underestimate product failure rates
• D)​Both A&B

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Definitions:

Armed Robbery

A criminal act involving theft or attempted theft under threat of violence, where the perpetrator is armed with a weapon.

Tax Fraud

The illegal act of evading or defeating tax laws, often involving the deliberate falsification of tax returns to reduce tax liability.

Violates An Injunction

Engaging in an action that disobeys a court's legally enforceable order or ruling, typically resulting in legal penalties.

Contempt Of Court

Contempt of court refers to acts that disrespect the court or its processes, or that obstruct the administration of justice, and may be punishable by fines or imprisonment.